Commercial Gross Lease

What is a Commercial Gross Lease?

A Commercial Gross Lease is defined as the part of a commercial lease that outlines a tenant paying the landlord a fixed amount of rent each month which will include any operational costs for the property, such as taxes, fees and maintenance expenditures. This type of agreement can vary, and may or may not include payments for items such as utility costs or garbage pick up, depending on the agreement. A Gross Lease is different from a Net Lease, which requires the tenant to pay these extra costs on top of their rent, usually including a decrease in rental price as a result.

Commercial Gross Leases: Things to Consider

A Gross Lease may simplify payments for the tenant by only having one flat fee, and the property manager works the cost of these expenditures into the monthly rent. However, this type of agreement can carry risk for both parties. A tenant could get a great deal, or could end up paying more than if there was a net lease agreement. Likewise, a landlord could ensure the operational cost are paid through this type of agreement, but they are the party responsible for these payments which adds extra responsibilities for them, and in cases where operational costs increase during the term, the landlord could lose money in the long-run.

Return to the main Glossary of Commercial Leasing Terms