Common Types of Commercial Real Estate Leases

When searching for properties, you will notice that there are many types of commercial real estate leases. You’ll want to understand different lease types to understand exactly what you’ll be paying each month. This knowledge will also help you negotiate a contract that best benefits your business.

We’ll discuss common terms in the Phoenix market, where Menlo Group typically works. Verbiage may vary in different parts of the country.

Full-Service Lease (FS)

A full-service lease is also known as an all-inclusive lease or full-service gross lease. In this type of lease, your base rent includes:

• Common area maintenance fees
• Property taxes
• Property insurance
• Utilities
• Janitorial service

Modified Gross Lease (MG)

In a modified gross lease, you will pay a flat base rent that includes:

• Common area maintance fees
• Property taxes
• Property insurance

Costs that are NOT included in the lease and are paid separately include:

• Utilities
• Janitorial service

Net or Triple Net Lease (NNN)

With a triple net lease, you pay a reduced flat base rent AND your share of all other fees, including:

• Common area maintenance fees
• Property taxes
• Property insurance
• Utilities
• Janitorial service

An experienced broker can help you determine which types of commercial real estate leases will best benefit you and your business. Contact us to connect with one of our trusted commercial real estate advisors.