Every commercial lease comes down to one question: Who pays for what?

The base rent on a flyer only tells you part of the story. The lease structure behind that number determines whether your real occupancy cost is what’s printed on the page or something a good deal higher once operating expenses hit.

For landlords, that same structure decides how exposed you are to rising taxes, insurance and maintenance over the life of the lease.

I explain this to clients almost every week, so I wanted to break it down here in plain terms.

Full-service gross: The all-in number

This is the easiest one to explain to a tenant. The quoted rent covers everything – taxes, insurance, CAM (common area maintenance), utilities, janitorial – so you write one check, and the landlord handles the rest.

You’ll see this most often in multi-tenant office buildings, where it’s tough to fairly divide expenses across tenants using the space differently.

The catch for landlords is you’re carrying the risk if costs climb during the term, which is why most full-service leases build in a base year and an expense stop. Anything above that base year gets passed back to the tenant.

Modified gross: The middle ground

Modified gross splits the difference, and it’s the one I get the most questions about.

Base rent still covers most of the operating costs, but the tenant picks up something specific, usually utilities or janitorial, that gets carved out and negotiated directly.

There’s no standard definition here, which is exactly why it needs a closer look before you sign. I’ve seen two modified-gross leases that looked nothing alike once you dug into what was actually carved out.

On the Western Slope, this is a popular structure for smaller industrial and flex buildings, where full NNN doesn’t quite fit, but pure full-service asks the landlord to eat costs that should really be shared.

Triple net (NNN): The landlord’s shield

In a triple-net lease, the tenant pays base rent plus their share of the three «nets» – property taxes, building insurance and CAM – on top of their own utilities and interior upkeep. This is the standard structure for single-tenant retail, industrial and freestanding commercial space, because it protects ownership from swings in operating costs.

If you’re a tenant looking at an NNN listing, don’t stop at the quoted rent. Add in the CAM and tax pass-throughs, usually shown as «plus NNN» on the flyer, before you decide anything is or isn’t in budget.

Single net, double net, percentage leases

A single-net (N) lease has the tenant covering base rent plus property taxes, with the landlord still handling insurance and maintenance.

Double net (NN) adds insurance to the tenant’s side, but maintenance and structural items stay with the landlord.

You won’t see these as often as full gross or NNN, but they show up in sale-leaseback deals and situations where a landlord wants to keep control over capital improvements while still shifting some cost to the tenant.

Retail leases add another wrinkle with percentage rent, a share of gross sales layered on top of base rent once sales cross a negotiated breakpoint, usually paired with an NNN structure.

Reading a listing like a broker

Here’s the thing I tell every first-time tenant: If you’re comparing a full-service gross space to a NNN space at the same quoted rent, you’re not actually comparing apples to apples. That NNN space has an added cost per square foot for taxes, insurance and CAM that has to get factored in first.

Walking someone through that real, all-in number is honestly half the job. Know which structure fits which asset class, and you’ll set realistic expectations whether you’re pricing a listing or evaluating one.

Matthew Parker is a commercial broker for Bray Commercial Real Estate.