Different Types of Commercial Tenancies/Leases
Sandonato Law represents both commercial landlords and commercial tenants in Massachusetts.
Commercial leases are structured differently depending on how operating costs are divided between landlord and tenant. The three most common structures are triple net (NNN), gross, and modified gross. These terms get used loosely and sometimes incorrectly — what actually governs is the lease language itself, not the label attached to it.
Triple Net (NNN) Lease
In a NNN lease, the tenant pays base rent plus a proportionate share of three cost categories: operating expenses, property taxes, and insurance. This structure shifts most of the property's operating costs onto the tenant and is common in retail leasing. It's generally considered the most landlord-favorable of the three structures.
Gross Lease
A gross lease bundles operating expenses, taxes, insurance, and maintenance into one fixed monthly rent figure. This shifts more risk to the landlord, since property expenses can rise unpredictably while the rent stays fixed. Gross leases are more common in larger multi-tenant developments like shopping malls, and often include carve-outs — separately metered utilities, marketing or merchant association fees, or a percentage of gross sales — even though the lease is described as "gross."
A lease labeled "full-service gross" is often, in practice, closer to a modified gross lease. The label alone doesn't tell you what's actually being charged — the lease terms do.
Modified Gross Lease
A modified gross lease sits between NNN and gross, and is common in multi-tenant office and mixed-use buildings. Cost allocation is negotiated on a case-by-case basis rather than following a fixed formula. Base rent is typically higher than under a NNN lease but lower than under a gross lease.
Many modified gross leases use a "base year" structure — expenses in a set base year become the floor, and only costs above that baseline get passed through to the tenant in later years.
A related structure, the double net (NN) lease, has the tenant paying property taxes and insurance in addition to base rent, while the landlord retains responsibility for maintenance.
Why the Structure Matters
The lease type affects both sides differently. Tenants weigh cash flow predictability and long-term cost exposure. Landlords weigh how much operating risk they're retaining versus passing through. Whichever structure a lease uses, the label isn't what controls — the specific expense definitions, exclusions, and caps written into the lease are what determine who actually pays for what.
Contact
If you're negotiating, drafting, or reviewing a commercial lease and want to understand how the expense structure affects your position, contact Sandonato Law.
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Commercial leases are contracts, and commercial disputes are resolved based on what the lease says, not general landlord-tenant statutes. We handle commercial lease drafting and review, lease enforcement, evictions, assignment and subletting disputes, and related matters for both landlords and tenants across residential and commercial property types.