Types of Commercial Leases
Commercial lease agreements are complex and sometimes confusing for tenants. This is especially true with the net lease option because there are multiple types of commercial net leases:
In a single-net lease, the tenant pays a base rent, a share of the building's property tax, as well as utilities and janitorial services. The landlord is responsible for all other building expenses.
In a double-net lease, the tenant pays a base rent, a share of the property taxes, the property insurance premiums, and utilities and janitorial services. The landlord is responsible for common area maintenance and structural repairs.
A triple-net lease is most common with commercial warehouses. In this lease, the tenant pays a base rent, all or part of the property taxes and insurance (in addition to business taxes and insurance), property management fees, utilities and janitorial services, and common area maintenance expenses (for things such as sewer, water, trash collection, landscaping, parking lots, fire sprinklers, and any commonly shared areas or services). If there’s a lobby attendant, the tenant also pays his or her wages as part of the NNN fees.
An absolute triple-net lease is more rigid and binding than a standard triple-net lease, but it’s also not as common. In this lease, the tenant is responsible for the building expenses no matter what happens, even in the event of a catastrophe. For example, if the building were destroyed by a tornado, the tenant would be responsible for the construction costs to rebuild it.
