Who Pays for What? 8 Types of Commercial Real Estate Leases to Know

8 Types of Commercial Real Estate Leases Explained

Commercial real estate leases don’t just determine your rent — they define who carries the financial risk. Property taxes, insurance, maintenance, utilities, and repairs can shift dramatically depending on the lease type, often changing the true cost of a space by thousands of dollars per year.

So who pays what in a commercial lease?
The answer depends on whether you’re in a gross lease, modified gross lease, net lease (N, NN, NNN), or an absolute lease — and misunderstanding those differences can expose tenants and landlords to unexpected expenses.

This guide breaks down the 8 most common commercial real estate lease types, clearly showing:

• Who pays taxes, insurance, utilities, and maintenance
• How risk is divided between tenant and landlord
• Which lease structures are most common for different property types

8 Types of Commercial Real Estate Leases

The breakdown of property expenses is the main differentiator among commercial real estate leases. In some, the landlord assumes all responsibility (and costs) for maintaining, powering, and insuring the property, while in others, tenants do — either in full or in part.

Here are 8 of the most common commercial leases and how responsibilities break down under each.

LEASE TYPE	TENANT PAYS	LANDLORD PAYS
Gross	Rent	Taxes Insurance All utilities and maintenance of entire building
Modified Gross	Rent Utilities and maintenance of individual units	Taxes Insurance Utilities and maintenance of common areas
Net	Rent Utilities Fixed portion of operating expenses	Varies depending on what type of net lease
Single Net	Rent Utilities Fixed portion of property taxes	Portion of taxes Property insurance Utilities and maintenance of common areas Repairs
Double Net	Rent Utilities Fixed portion of property taxes and insurance	Portion of taxes and insurance Utilities and maintenance of common areas Repairs
Triple Net	Rent Utilities Fixed portion of property taxes, insurance, and common area maintenance	Portion of taxes, insurance, and common area maintenance Repairs
Absolute Net	Rent All property taxes, insurance, utilities, common area maintenance, and repairs	None
Percentage	Rent Percentage of monthly sales	Taxes Insurance All utilities and maintenance of entire building

 

Gross Lease

A gross lease, also known as a full-service commercial lease, is one of the simplest lease types for tenants to understand. Under a gross lease, the tenant pays a fixed base rent, while the landlord covers property taxes, insurance, utilities, cleaning, and building maintenance.

Gross leases are common in office buildings and multi-tenant commercial properties, where tenants prefer cost predictability and minimal exposure to operating expense increases.

Modified Gross Lease

A modified gross lease falls between a gross lease and a net lease. Tenants pay base rent, along with utilities, cleaning, and maintenance for their individual unit, while landlords remain responsible for property insurance, property taxes, and common area maintenance.

This lease type is frequently used in office and medical properties, where tenants want some control over their space but still benefit from shared building expenses.

Net Lease

A net lease requires tenants to pay rent plus a fixed portion of operating expenses, such as property taxes, insurance, and common area maintenance (CAM). Net leases are most commonly broken into single net (N), double net (NN), and triple net (NNN) leases, each increasing the tenant’s financial responsibility.

Net leases are widely used in retail, industrial, and investment-focused commercial real estate due to their flexibility and risk allocation.

Single Net Lease (N Lease)

In a single net lease, the tenant pays base rent, utilities, and a portion of the property taxes, while the landlord continues to cover property insurance, common area maintenance, and structural repairs.

Single net leases are less common today but may still appear in multi-tenant retail or mixed-use properties.

Double Net Lease (NN Lease)

A double net lease (NN lease) builds on the single net structure by requiring tenants to pay rent, utilities, property taxes, and property insurance, while landlords remain responsible for common area maintenance and major repairs.

Double net leases are frequently used in retail centers and freestanding commercial buildings, offering a balance between tenant responsibility and landlord control.

Triple Net Lease (NNN Lease)

A triple net lease (NNN lease) is one of the most common commercial real estate lease types, particularly in retail, industrial, and single-tenant investment properties. Under a NNN lease, the tenant pays rent, property taxes, insurance, and common area maintenance (CAM).

Because triple net leases shift most operating costs to the tenant, they are often attractive to investors seeking predictable income but require tenants to carefully evaluate long-term expenses.

Absolute Net Lease

An absolute net lease, sometimes called an absolute triple net lease, places all financial responsibility on the tenant. This includes rent, property taxes, insurance, utilities, common area maintenance, and all repairs — including structural repairs and roof replacements.

Absolute net leases are most commonly used in single-tenant, long-term commercial real estate investments, offering landlords minimal involvement but exposing tenants to the highest level of risk.

Percentage Lease

A percentage lease is commonly used in shopping centers, malls, and retail properties. Tenants pay a base rent plus a percentage of their gross monthly sales, which contributes to operating expenses and property maintenance.

Percentage leases align landlord and tenant incentives, making them popular in high-traffic retail environments where sales volume directly impacts rent.

 

Choosing the Right Commercial Lease Type

Understanding the different types of commercial real estate leases is essential before signing a lease or listing a property. While rent is often the most visible cost, property taxes, insurance, utilities, and maintenance responsibilities can significantly impact the true cost — and risk — of a commercial space.

From gross leases that offer cost predictability, to triple net (NNN) and absolute net leases that shift expenses to tenants, each lease structure serves a different business need. Choosing the right lease type depends on your budget, risk tolerance, and the type of property you’re leasing or marketing.

At SharpLaunch, lease structure plays a critical role in how commercial real estate listings are marketed, discovered, and evaluated. Whether you’re a tenant searching for space or a landlord listing a property, understanding lease types helps you compare opportunities more accurately and avoid surprises down the line.

 

What This Means for Commercial Listings

Understanding commercial real estate lease types isn’t just academic — it directly affects how properties are marketed, who they appeal to, and how quickly they rent or sell. Here’s how lease structure impacts listings on a platform like SharpLaunch:

1. Why NNN Listings Attract Different Buyers

Triple net (NNN) leases are popular with investors and owner-occupiers looking for predictable cash flow. Because tenants pay most or all operating expenses, these listings often attract buyers seeking low-maintenance investment properties.

2. Why Gross Leases Rent Faster in Certain Markets

Gross leases, where landlords cover most operating expenses, are especially appealing to small businesses, startups, and tenants prioritizing cost predictability. In markets with high competition for office or retail space, gross leases often rent faster because they reduce the complexity and risk for tenants.

3. How Lease Structure Impacts Advertised Rent

Lease type directly affects the advertised rent on commercial listings. For example:

• Gross leases often appear higher in base rent because the landlord covers expenses.
• Triple net (NNN) leases may advertise lower base rent, but tenants must account for property taxes, insurance, and CAM charges.
• Absolute net leases require careful tenant analysis due to all-in costs, which may not be obvious from the advertised rent alone.

By highlighting the lease type on listings, platforms like SharpLaunch help tenants and investors compare options, avoid surprises, and make more informed decisions.