While residential rent is typically a straightforward monthly fee, the world of commercial leasing features a variety of complex rent structures designed to allocate the financial responsibilities of a property between the landlord and the business tenant. The type of rent structure used has a profound impact on a business’s total occupancy cost and its financial risk. Understanding the difference between a gross lease, a net lease, and a percentage lease is a fundamental aspect of commercial real estate.

The simplest structure is the gross lease. In this arrangement, the tenant pays a single, flat monthly rent amount. The landlord is responsible for paying for all of the property’s operating expenses, including property taxes, insurance, and maintenance. This model is most common in multi-tenant office buildings and provides the tenant with the greatest cost certainty, as their monthly payment is predictable. However, the landlord factors these expected costs into the base rent, which may be higher as a result.