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ARTICLE · 10 APRIL 2025

Gross Lease vs. Net Lease: Understanding The Key Differences

Scarinci Hollenbeck LLC
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Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease...

United StatesReal Estate and Construction
Robert L. Baker, Jr.
Robert L. Baker, Jr.

Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs.

One key distinction between lease types is how rent is calculated and paid. This article addresses the two most common types of leases — gross lease vs net lease — along with their various subtypes.

Gross Lease vs. Net Lease

The gross lease is the simplest form of commercial lease. In a gross lease, the tenant pays a flat rental fee. Meanwhile, the landlord covers all operating expenses, such as property taxes, insurance, utilities, maintenance, and common area maintenance (CAM). Rents are calculated by landlords to reasonably cover the operating costs of the premises.

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