Commercial Lease Cost Comparison Calculator
Compare the true annual occupancy cost of a Triple Net (NNN), Gross, and Modified Gross commercial lease on the same space. Adjust for base rent, CAM, taxes, insurance, and utilities to see what each structure actually costs per square foot.
Space & Base Rent
Operating Expenses ($/sq ft/yr)
Gross & Modified Gross Settings
Landlords add a buffer to base rent in gross leases to cover opex and increases.
Often tenant pays increases over a base year, or a fixed percentage of opex.
Annual Occupancy Cost
Enter space and expense details and click compare.
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Introduction
Two leases with the same headline rent can cost a tenant very different amounts, and the difference is buried in the structure. A Triple Net (NNN) lease quotes a low base rent but passes property tax, insurance, CAM, and utilities to the tenant. A Full Service Gross lease quotes a higher rent but the landlord carries the operating expenses (and the risk of increases). A Modified Gross lease splits the difference, often with a base year or an expense stop. The Building Owners and Managers Association standards and the SIOR lease definitions govern how these terms are used, and misunderstanding them is the most common way a tenant overpays or a landlord undercharges. This calculator puts all three structures on the same space so you can compare true occupancy cost, not just the quoted rate.
What This Calculator Does
This tool compares the annual occupancy cost of a Triple Net, Full Service Gross, and Modified Gross lease on the same space. Enter the rentable square feet, the base rent per square foot, and the operating expense lines (CAM, property tax, insurance, utilities, janitorial). The NNN option adds all opex to the base rent. The Gross option bundles opex into a landlord markup. The Modified Gross option splits opex by a tenant share percentage. It reports total annual cost, monthly cost, and cost per square foot for each structure.
The Formula
In a Triple Net lease, the tenant pays base rent plus its pro-rata share of all operating expenses (the three nets are property tax, insurance, and CAM, with utilities and janitorial often added). The landlord carries little expense risk, so the base rent is the lowest. In a Full Service Gross lease, the landlord pays all operating expenses and charges a single rent that includes a markup for expenses and future increases; the tenant has cost certainty but pays the highest headline rate. In a Modified Gross lease, the tenant pays base rent plus a defined share of expenses (often increases over a base year, or a fixed percentage), splitting the risk. The total annual cost is what matters for budgeting, not the quoted base rate.
Step-by-Step Example
Enter the space
A tenant leasing 4,000 sq ft at a quoted base rent of $32 per sq ft per year.
Enter the operating expenses
CAM $8, property tax $4, insurance $1.50, utilities $3, janitorial $2 per sq ft per year.
Set the gross markup and modified split
She enters an $8 per sq ft gross opex markup and a 50% tenant share for the modified gross option.
Compare total cost
NNN totals $50.50 per sq ft ($202,000/year). Gross totals $40 per sq ft ($160,000/year) but the landlord carries all expense risk. Modified gross totals $42.25 per sq ft ($169,000/year).
Real-World Use Cases
Tenant Lease Negotiation
A tenant comparing two proposals with different structures uses the calculator to normalize them to a true annual cost before negotiating, since a $32 NNN quote can cost more than a $40 gross quote.
Landlord Quote Structuring
A landlord deciding whether to offer a NNN or gross lease models both to see which produces the desired NOI while remaining competitive against comparables in the market.
Budgeting for Expense Escalations
A tenant in a modified gross lease with a base year estimates the next-year cost when operating expenses rise above the stop, so the budget reflects the true occupancy cost.
Common Mistakes to Avoid
Comparing only the base rent. A $30 NNN lease with $15 of opex costs more than a $42 gross lease. Always compare total occupancy cost per square foot, not the quoted base rate.
Ignoring the base year in a modified gross lease. A modified gross lease with a base year makes the tenant pay only expense increases over year one. A fixed-percentage modified gross makes the tenant pay a set share from day one. These are very different cost structures.
Forgetting annual escalations. Gross leases usually escalate the entire rent 2% to 3% per year. NNN leases escalate only the base rent, with opex rising at market rate. Over a 5-year term, the escalation structure can flip which lease is cheaper.
Underestimating NNN expense volatility. In a NNN lease, the tenant absorbs property tax reassessments and insurance spikes. A sale that triggers a reassessment can raise the tenant CAM bill sharply in year two.
Frequently Asked Questions
What is the difference between NNN and gross lease?
In a Triple Net (NNN) lease, the tenant pays base rent plus its share of property tax, insurance, and CAM (and often utilities and janitorial). In a Full Service Gross lease, the landlord pays all operating expenses and charges a single rent that includes a markup. NNN has a lower base rent but the tenant carries expense risk. Gross has a higher base rent but the tenant has cost certainty.
What is a modified gross lease?
A modified gross lease is a middle ground where the tenant pays base rent plus a defined share of operating expenses. The most common form uses a base year (the tenant pays only increases over the year-one expense level) or an expense stop (the landlord pays expenses up to a set dollar amount and the tenant pays the rest). It splits expense risk between landlord and tenant.
Which lease structure is cheapest for the tenant?
It depends on the opex level and the gross markup. A NNN lease is cheapest when opex is low and stable. A gross lease can be cheaper when opex is high or rising fast, because the landlord absorbs the increases (though the markup reflects that risk). The only way to know is to total the annual cost for each, which this calculator does.
Are utilities included in a NNN lease?
Often yes, for the tenant directly-metered portion. Common-area utilities (lobby, parking lot lighting) are part of CAM. Tenant-suite utilities are usually billed directly to the tenant in a NNN lease, while in a gross lease they are bundled into the rent. Check the lease for whether utilities are separately metered or included.
Accuracy and Disclaimer
This calculator models standard NNN, Full Service Gross, and Modified Gross lease structures using the expense lines you enter. Actual leases vary widely and include base years, expense stops, annual escalations, free rent, tenant improvement allowances, and exclusions that change the true cost. This is not legal or brokerage advice. Have a licensed commercial broker or real estate attorney review any lease before signing.
Conclusion
The lease structure shifts who carries expense risk more than it changes the long-run cost, but the short-run cash difference can be large. Compare the true occupancy cost here, then check the NOI Calculator for the landlord side and the Commercial Mortgage DCR Calculator if you are financing the property.
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