The flexibility to negotiate and structure deals whichever best suits their needs is one of the most alluring features of commercial real estate for investors.

Given how many alternatives you actually have when working with an investment property or seeking to lease unoccupied space to a new tenant, it may also be one of the more stressful aspects.

To discover which one best suits your investment or leasing needs, let's examine the distinctions between triple net and gross leases.

A Triple Net Lease is what? One of the more typical lease arrangements in commercial real estate is the net lease for sale – net lease world. "Net" refers to the costs that are in addition to base rent passed straight on to the tenant. These pass-through costs, which are frequently referred to as "Additional Rent," include building insurance, property taxes, and common area maintenance (CAM). Based on their pro rata portion of the premises, these costs are directly passed along to the tenants on a monthly (the most typical), quarterly, or annual basis.

Typical Area Upkeep Common area maintenance, or "CAM," refers to the costs required for upkeep of the property's common spaces, which include shared corridors and restrooms, parking areas, landscaping, and more.

Real estate taxes The government levies property taxes to help pay for the infrastructure that supports and serves a particular site. These taxes are separate from any sales or excise taxes that the tenants may pay due to the nature of their business.

Construction Insurance The landlord has this insurance to cover any problems that might develop within or on the property. In order to be sure that the rent is being paid, landlords frequently hold this coverage in their name and are reimbursed by the tenants.

How to Quote Triple Net Leases "$20 per square foot NNN with $5 per square foot in pass-throughs" is a common quote for triple net leases. The NNN expenses will be those pass-throughs, thus in this case, a renter would pay $25 per square foot total (plus utilities, should the NNNs change).

A Gross Lease is what? The opposite of triple net leases, gross leases are essentially a streamlined form of the leasing arrangement.

While the NNN costs are constant, the rent is presented as an all-in rate, which means the tenant will pay a single amount of rent and the landlord will take care of building insurance, property taxes, and common area maintenance.

This lease structure is popular among both renters and landlords because it is straightforward and makes it simple for everyone to comprehend how the lease will be structured and how payments will be made. If the lease is full-service gross, it will cover all costs associated with the property, including utilities and triple nets.