The direct answer
A gross lease places more operating-cost responsibility on the landlord, a triple-net lease generally passes specified taxes, insurance and maintenance or operating costs to the tenant, and a modified-gross lease falls between those structures. The actual lease language controls the economics.
Read the expense responsibilities line by line
Labels such as gross, modified gross and NNN are shorthand. Verify which party pays taxes, insurance, utilities, repairs, CAM and capital items instead of relying on the label alone.
To apply the approach to an editable scenario, use the NNN Lease Calculator. For the neighboring question, explore Commercial Rent Calculator.
Compare total occupancy cost, not base rent only
A lower NNN base rent can produce a higher all-in occupancy cost after recoveries. A higher gross rent can include expenses the tenant would otherwise pay separately.
Model escalation and reconciliation mechanics
Commercial leases can include annual increases, expense stops, base years, caps and reconciliation provisions. Those details materially affect effective rent and cash flow.
Worked example
Tenant A pays $30 per square foot gross. Tenant B pays $22 base rent plus $10 of NNN charges. Despite the lower base rent, Tenant B’s current all-in occupancy cost is $32 per square foot.
Common mistakes and limitations
Do not assume every lease marketed as NNN shifts every property cost to the tenant.
Actual NNN leases define recoverable expenses, audit rights, caps and reconciliations contractually.
Frequently asked questions
Is a triple-net lease always cheaper for the landlord to operate?
It can shift specified expenses to the tenant, but the exact obligations depend on the lease.
Is modified gross a standardized lease form?
No. The term can describe many different expense-sharing structures.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Read our editorial policy for the scope of these educational methods.