The Gross Lease in Commercial Real Estate

Though some sources break out the full service lease type from the gross lease in commercial real estate, they are more often the same. The landlord pays for:

Taxes

Insurance

Maintenance

The gross commercial lease is used most often in multi-tenant and single tenant office buildings, industrial and some retail properties. The landlord collects fixed rents and pays the expenses out of them.

As costs increase over time, many gross and full service leases will contain escalation clauses that increase rents over time to offset tax increases and higher insurance and maintenance costs. It is important that a tenant shopping for space understand any escalation clauses in order to project rent expense into the future.