Type of Leases Explained

Difference between a Net and a Gross Lease

Usually the base rent on a Net Lease will be less than a Gross Lease, however the devil is in the details! Overall, the total cost of leasing with a Gross Lease will be less than a Net Lease. In the Net Lease the Lessee (tenant) pays a percentage (amount of space being leased compared to the total area of the building) of replacement of capital components (HVAC, house lights, mail boxes), the property tax bill, Lessor’s (landlord) building and property insurance, and outside landscaping. In the Gross Lease, those items are included into the base rent. To compare the two, open the pdf’s side by side (gross vs. net) you will find that in paragraph 4.2 regarding Common Area Expenses and who pays for it is the biggest difference between the Net and Gross Leases.

Differences between a Multi-Unit and Single Building Lease

The Multi-Unit Lease contains information regarding Common Areas. Common Areas are the areas (usually outside the building) that all Lessees (tenants) share. Parking lots, loading and unloading areas, driveways would usually fall into the Common Area definition. Usually with Multi-Unit Leases, the Lessor has control of those areas, and the Lessees are sharing those areas. Whereas in a Single Building Lease the Lessee has control since they are leasing the entire parcel, in addition to the building.

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