By Kas Filippova, eXp Commercial
📍 Serving Cleveland and Northeast Ohio landlords, tenants, and investors
When you’re signing or negotiating a commercial lease, one of the first questions to answer is: What type of lease is it?
Two of the most common structures in commercial real estate are the Triple Net (NNN) lease and the Gross lease — and understanding the difference between them is crucial whether you’re a landlord looking to protect your bottom line or a tenant trying to budget monthly costs.
1️⃣ What Is a Triple Net (NNN) Lease?
In a Triple Net lease, the tenant pays base rent plus their share of operating expenses — typically property taxes, insurance, and maintenance (“the three nets”).
That means tenants cover most of the property’s ongoing costs, while the landlord collects a more predictable net income.
What Tenants Pay:
- Base rent
- Real estate taxes
- Property insurance
- Common area maintenance (CAM) — landscaping, snow removal, etc.
What Landlords Cover:
- Structural components such as the roof, foundation, and exterior walls (depending on lease terms).
Best For:
- Investors seeking hands-off income.
- Tenants who want control over their space and utility usage.
Local Example:
A retail building in Avon or Strongsville leased to a national brand (like Starbucks or Dollar Tree) is almost always structured as a Triple Net lease — stable rent, predictable expenses, and minimal landlord involvement.
2️⃣ What Is a Gross Lease?
In a Gross lease, the tenant pays one flat rental rate, and the landlord covers most (or all) of the building’s expenses.
What Tenants Pay:
- A single monthly rent payment (may include utilities).
What Landlords Cover:
- Taxes, insurance, maintenance, and repairs.
Best For:
- Multi-tenant office buildings or coworking spaces (like Icon Cowork in Lakewood).
- Small business owners who prefer consistent monthly expenses.
Example:
A 1,000-SF office suite in Lakewood or Westlake with a $1,500/month gross rent likely includes all utilities and maintenance — making it easy for tenants to budget and focus on their business.
3️⃣ Modified Gross Lease: A Middle Ground
A Modified Gross lease blends the two. Tenants pay a base rent plus some shared expenses — for instance, utilities or snow removal — while the landlord covers property taxes and insurance.
This structure is popular for flex spaces, light industrial, and smaller office buildings across Northeast Ohio. It offers flexibility and easier cost control for both sides.
4️⃣ How to Decide Which Lease Works Best
The right lease structure depends on your goals, risk tolerance, and property type:
For Landlords:
- NNN leases create predictable, passive income with fewer management headaches.
- Gross leases can attract more tenants faster — ideal for smaller or shared spaces.
For Tenants:
- NNN leases offer transparency and control but require budgeting for variable expenses.
- Gross leases simplify accounting, perfect for startups or service-based businesses.
5️⃣ Cleveland Market Perspective
In Northeast Ohio, most retail and industrial properties operate under NNN structures, while office and flex spaces often use modified gross or full-service leases.
Understanding these differences helps both landlords and tenants set realistic expectations — especially as property taxes and operating costs continue to rise.
Final Thoughts
Choosing the right lease structure isn’t just about rent — it’s about risk allocation, predictability, and long-term performance.
If you’re a landlord preparing to list a property or a business owner reviewing lease terms, I can help you evaluate which structure makes the most sense for your goals and local market.
Kas Filippova | eXp Commercial
📞 216-374-3689
🌐 kascommercial.com
📍 Cleveland, Ohio