Commercial Lease Types: CAM Audit Guide

A commercial lease structure in which the tenant pays base rent plus their pro-rata share of all three major property expense categories: property taxes, building insurance premiums, and common area maintenance (CAM) costs. The landlord typically retains responsibility only for structural capital items such as the roof and foundation.

A commercial lease structure where the tenant pays base rent plus their pro-rata share of property taxes and building insurance premiums. Unlike a Triple Net lease, the landlord retains financial responsibility for common area maintenance, structural repairs, and ongoing property upkeep.

The most landlord-favorable of the "gross" structures and the least common net lease variant. The tenant pays base rent plus their pro-rata share of property taxes only. The landlord retains responsibility for building insurance, all maintenance, CAM expenses, and structural costs.

A hybrid lease structure negotiated between a pure gross lease and a triple net lease. The base rent covers some operating expenses (typically property taxes and building insurance) while the tenant is directly responsible for other costs (typically utilities and interior maintenance). The exact allocation of expenses is negotiated and varies significantly between leases.

A lease structure where the tenant pays a single flat monthly rent that includes all operating expenses, property taxes, insurance, utilities, maintenance, janitorial, and management, for the base year. The landlord absorbs all operating costs up to the base year expense stop. In subsequent years, tenants typically pay their pro-rata share of expense increases above the base year stop.

The most extreme form of net lease in which the tenant assumes 100% financial responsibility for all property costs, including structural elements such as the roof, foundation, and exterior walls that are typically the landlord's responsibility under a standard NNN lease. The tenant essentially manages and maintains the property as if they owned it. Absolute net leases are typically used for single-tenant, investment-grade corporate facilities.

A long-term lease (typically 25–99 years) covering only the land, not any structures on it. The tenant (lessee) constructs and owns all improvements on the land for the lease term. The landlord (lessor) receives ground rent. At lease expiration, the land and all improvements typically revert to the landlord. Ground leases are common for fast food pad sites, bank branches, and corporate build-to-suit facilities.

A lease structure, most common in retail, where the tenant pays a base rent plus additional "percentage rent" equal to a percentage of their gross sales above a defined breakpoint. The percentage rent component is designed to allow landlords to participate in the upside of successful retail operations. The underlying lease structure (the fixed rent component) is typically NNN.

A lease structure common in industrial, warehouse, and logistics properties where the base rent covers property taxes and building insurance (as in a double net structure), but the tenant takes direct responsibility for utilities, interior maintenance, and HVAC upkeep. The landlord typically retains responsibility for the structural elements (roof, exterior walls, foundation) and exterior maintenance.

A comprehensive commercial lease structure used in shopping centers, strip malls, and power centers. Retail leases are typically NNN with additional obligations specific to the retail environment including: pro-rata share CAM reconciliation tied to gross leasable area (GLA) calculations, marketing fund contributions, merchants association dues, and co-tenancy provisions that allow rent reduction if major anchor tenants depart.

A commercial lease structure used for multi-tenant office buildings, typically structured as a Full Service Gross (FSG) lease with Base Year expense stops, though some office markets (particularly suburban) use modified gross or NNN structures. Office leases in Class A high-rise buildings in gateway markets (New York, San Francisco, Chicago) are almost universally FSG with base year mechanics.

A specialized commercial lease for medical, dental, and healthcare outpatient facilities. Typically structured as either NNN or Full Service Gross with significant additional provisions for: heavy utility usage (plumbing, power for medical equipment), bio-hazardous waste disposal, ADA compliance for patient access, specialized janitorial requirements, and after-hours HVAC for patient care hours that extend beyond standard business hours.

A specialized variant of the Triple Net lease structure optimized for single-tenant retail properties, often freestanding pad sites or anchor-equivalent standalone buildings leased to investment-grade retailers (pharmacy chains, dollar stores, auto parts retailers, fast food franchises). These leases typically feature long initial terms (10–20 years), minimal landlord obligations, and corporate guarantees from the tenant's parent entity.

A lease for "flex" industrial-office properties, buildings designed to accommodate a mix of office (typically 20–30% of the square footage) and industrial/warehouse use (70–80%). The lease structure is typically modified gross or NNN, with expense allocation reflecting the property's hybrid nature: the office portion may be subject to different HVAC and utility standards than the warehouse portion.

The most extreme form of commercial lease, where the tenant's rent obligation is absolutely unconditional, the tenant cannot terminate, abate, offset, or reduce rent under any circumstances whatsoever, including total destruction of the premises. Named because the lease is as creditworthy as a corporate bond. Bondable net leases are exclusively used for investment-grade tenants in sale-leaseback transactions where the property is being used as a financing vehicle.