There are several types of commercial leases to be aware of—here are the definitions for five of them, as outlined in the article “Lease Types Defined”:
1.Full Service (FLSV) – A lease in which operating expenses and property taxes are included in the stated rent.
2.Triple Net (NNN) – A lease in which the tenant pays a fixed rent rate, as well as other property lease expenses including taxes, maintenance, insurance, utilities, etc.
3.Full Service Except Janitorial (FLSVEJ or FSEJ) – Similar to a full service lease, except the janitorial services are not included in the rental rate.
4.Gross – A lease in which the listed rent covers taxes and operating expenses. This is essentially the same as a FLSV lease and the opposite of a NNN lease, and it is the most uncommon type of commercial lease.
5.Modified Gross (Mod Gross) – Somewhere between an NNN and Gross lease—some expenses are included, but things like utilities are most likely the tenant’s responsibility, but even utilities could be combined depending on how things are metered in the building.
If you are looking into commercial leases for your business, it is important to understand what each of these lease types mean and what kind of payment would be most cost efficient for your business.