Last updated: November 5, 2026
A gross lease is a commercial lease where the tenant pays one rent amount and the landlord pays most or all of the property's operating costs, such as taxes, insurance, and maintenance. It is common in office buildings, where it is often called full service gross. Tenants get predictable costs, while landlords carry expense risk.
The landlord sets a rent that is high enough to cover expected operating costs plus a return. The tenant pays that rent and generally does not receive separate bills for taxes, insurance, or common area upkeep. Some gross leases still have tenants pay their own in-suite utilities or janitorial service, so the details matter.
Full service gross usually means the landlord provides a wide set of services, often including utilities, janitorial, and building maintenance, all included in rent. It is common in multi-tenant office buildings. Many full service leases include an expense stop or base year, described below.
To limit risk from rising costs, many gross leases set a base year. The landlord covers operating costs up to the base year level, and the tenant pays its share of increases above that level in later years. An expense stop works similarly, using a fixed dollar amount per square foot instead of a year. These clauses make the lease less purely gross.
A modified gross lease falls in between. The parties negotiate which costs the landlord covers and which the tenant pays. For example, the landlord may cover taxes and insurance while the tenant pays utilities and in-suite repairs. Because terms vary, compare leases on total occupancy cost, not just headline rent.
Tenants benefit from simple budgeting and fewer surprise bills. The downside is that rent includes the landlord's estimate of costs plus a cushion, and tenants have less visibility into how money is spent. Base year clauses can also shift future increases to the tenant.
Landlords gain control over building operations and service quality, which can help attract tenants. They also take on the risk that taxes, insurance, or utilities rise faster than rent. Careful budgeting and expense stops help manage that exposure.
When comparing a gross offer with a net offer, estimate the total annual occupancy cost for each: base rent plus every cost the tenant will pay. Include likely increases over the term. The cheaper headline rent is not always the cheaper lease once operating costs are added in.
Is a gross lease better for small businesses? Many prefer it for predictable costs, but it depends on the terms and the rent.
Do residential leases count as gross leases? Most apartment leases work similarly, with the landlord paying property costs, but the term is mainly used in commercial real estate.
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Educational note: This page is general information, not investment, lending, tax, or legal advice. Briefcase is a media and marketing company, not a lender, broker, or advisor. Confirm terms and figures with qualified professionals before making decisions.
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