Types of Commercial Real Estate Leases

Type of Lease	What Rent Includes	Type of Space
Industrial Gross (IG)	Monthly Base Rent + Tenants Share of Utilites, Janitorial Services	Typically warehouse space, industrial, R&D and lower end office space
Triple Net Lease (NNN)	Monthly Base Rent + Tenants Share of Taxes, Insurance, Janitorial, Common Area Maintenance and Utilities	Any commercial lease; tenants should negotiate for favorable NNN terms
Fully Serviced Lease (FS)	Monthy Base Rent Only	Typcially higher end multi-tenant office space. Also common for subleases and shared spaces.
Percentage Lease	Monthly Base Rent + Percent of Monthly Sales	Retail Businesses, Malls

Triple Net (NNN)
The landlord pushes through all possible expenses to a tenant. The expenses include:

* Property Taxes: If a property sells or is reassessed, a small business can take a drastic hit to their rent expense. Try to negotiate a cap if possible on the potential increase.
* Building insurance: The small business pays for the landlord’s property insurance.
* Common Area Maintenance: Everything from security guards to landscaping to re-paving gets added into the number.
* Utilities: Some spaces are separately metered where you pay for your exact PG&E usage. If not, the landlord will bill you for your prorated share (your square footage/total building square footage).
* Janitorial: A cleaning crew that cleans your space and the common areas of the building.

Industrial Gross (IG)
Small Business pays for its own Utilities and Janitorial. Landlord pays for everything else

Full Service (FS)
Landlord is responsible for all expenses.

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