The type of commercial lease a business owner signs—gross, single net, double net, or triple net—determines who pays for property taxes, insurance, and maintenance, and therefore how predictable monthly costs will be and how much administrative work the tenant takes on. Gross leases bundle most expenses into one higher rent payment, while each "net" added to the lease shifts another major expense from landlord to tenant in exchange for a lower base rent. Because every lease defines these allocations differently, the label alone is not enough: the operating expense and tax clauses must be read before any comparison is meaningful.
Understanding Commercial Lease Basics
Commercial leases differ from residential ones chiefly in how flexibly they allocate operating costs. As the Illinois law firm Lavelle Law explains, a net lease is a highly flexible structure in which the tenant pays a lower base rent but assumes responsibility for specific property expenses such as taxes, insurance, and maintenance. At the opposite end of the spectrum, a gross lease means the tenant pays one lump sum for rent while the landlord pays additional expenses. A lease's structure may also be influenced by practical factors: an Illinois-focused legal overview notes that the kind of lease a landlord offers may depend on the type of business conducted, the age of the building, and the expected electricity and water usage. A third hybrid, the modified gross lease, splits expenses between the parties, with the exact breakdown varying by agreement.
