Every Commercial Lease Type, Mapped

One page, the whole taxonomy. The organizing axis never changes: expense responsibility, sliding from landlord to tenant. Match the structure to the job you want — not the label on the flyer.

The gross family

Full-service gross: one rent number; the landlord pays taxes, insurance, utilities, janitorial, and maintenance. That is office’s native form and it does not appear in the single-tenant net lease world this site covers. The “all-in” simplicity usually lasts one year: base-year clauses pass later increases through anyway. Load factors (usable versus rentable) can add 10–20% in a tower. Owning this paper is an operating business — vendor contracts, utility spikes, reconciliations. A mid-seven office cap on full-service paper and a six-handle absolute retail cap can produce similar cash with very different phone volume.

Modified gross: the label only means “we negotiated a split.” No two are identical. Office favors base-year deals (landlord covers year-one expenses; tenant pays the rise). Expense stops fix that idea as a dollar-per-foot number. Category splits hand utilities to the tenant and keep tax and structure with the owner — or whatever split survived negotiation. Warehouse “modified gross” frequently means the tenant pays everything except the roof and is already drifting toward NN. Convert every quote to all-in occupancy cost with the lease-cost calculator before you rank them. When an “NNN” listing’s fine print reveals a base year, reprice it as the different product it is.

The net family

Single net (N): tenant adds property taxes — rare in the wild. Double net (NN): taxes and insurance to the tenant; the landlord keeps the shell. Auto-parts is the classic habitat (AutoZone and O’Reilly paper often retains roof and structure), along with older dollar-store vintages and some legacy Starbucks. The market discount versus true NNN typically runs 25–50 basis points; the real math is the next capital event amortized against NOI. Inspect retained systems as if you own them, because you will. Some NN forms split repair from replacement — a distinction that prices one roof.

Triple net (NNN) (the guide): the three expense buckets go tenant-side; allocation of roof and structure still varies by document. Absolute net (inventory): everything, no exceptions — the bond-like end of the spectrum. Ground lease (detail): tenant owns its building on your land; decades-long, absolute by construction, reversion at the end.

Net versus gross is the same question asked at the building scale. Gross leaves a tax reassessment or an insurance doubling on the owner’s P&L. Net pre-insulates the rent, which is why a smaller net number is often worth more per dollar to an income buyer. Appraisers normalize everything to net-equivalent income; when the market does not, the spread belongs to whoever converted the structures honestly.

Fee simple versus leasehold

Fee simple: you own the real estate outright. Leasehold: you hold use of another owner’s dirt for a numbered term — a wasting asset with a countdown. Buying a building that sits on ground-leased land (hotels, some urban retail) means you pay ground rent and your interest expires with that ground lease. Being the landowner under a ground lease is the other side of the same paper — the McDonald’s-style position this site’s buyers usually want. A leasehold with 30+ years remaining can be like-kind to fee for 1031 purposes; that tax equivalence is not economic equivalence. Lenders want the loan to mature well inside the remaining term. Ground-rent reset clauses are the hidden repricing event. Know which interest the flyer is selling before anything else on it matters.

The specialty types

Percentage lease: base rent plus a share of sales above a breakpoint — malls and grocery-anchored retail; sales reporting rights become the landlord’s underwriting window. Sale-leaseback paper (detail): structurally a net lease, born at a closing table, priced by its own rules. Synthetic and credit-tenant leases: financing instruments wearing lease costumes — specialist territory.

Lease options and lease-purchase: occupancy with a purchase right (or obligation) bolted on. Option consideration, a strike price, an exercise window, and any rent credits are the moving parts. Structured loosely — below-market rent, outsized credits, a strike that makes exercise compulsory — the IRS can recharacterize the file as an installment sale. Net lease investors meet the instrument as tenant purchase options (a right to buy at term’s end caps your exit), rights of first refusal that chill bidding, and developer land-bank options on pads. Hunt the lease for extension rights and for a purchase right as two separate prices. They do not price the same.

Using the map

Passive income capital belongs on the net family’s far end. Operating skill earns its return in the gross family. Hybrids reward whoever reads them most carefully. Every listing’s label is marketing until the expense articles confirm it — the taxonomy’s only rule that always pays. From here, the acquisition process is how those structures get bought.