In New York’s ever-changing real estate market, the right commercial real estate lease can mean the difference between success and failure, growth or stagnation. At Linares Associates, we deliver the expertise needed to negotiate the right terms and partner with our clients to ensure that their legal strategy aligns with their commercial real estate portfolio.

Common Types of New York Commercial Real Estate Leases

There are three basic types of commercial real estate leases, with several sub-types and variations. Here is an overview of the most common types of commercial real estate leases in New York: 

1. Gross Lease/Full-Service Lease

With a Full Service or Gross Lease, the tenant pays a base rent. The landlord pays all additional building expenses, including insurance, real estate taxes, maintenance fees, and other costs. These types of leases are typical in multi-tenant commercial spaces, like office buildings.

Modified Gross Lease

The most common type of Gross lease is the Modified Gross Lease, where the tenant pays base rent and utilities, as well as a percentage of the building’s operating costs. For example, a tenant occupying 20% of a building is responsible for 20% of the operating costs. These leases often start with rent plus utilities, with the operating cost expenses to be calculated at the end of the first (base) year and collected every year thereafter.

2. Net Lease

The Net Lease is another very common type of commercial real estate lease. With a Net Lease, the tenant pays rent, utilities, and a proportion of the building’s operating expenses, including maintenance, taxes, and insurance. As above, a tenant occupying 20% of the building is responsible for 20% of the operating costs.

These types of leases are very common for long-term commercial rentals where the tenant wants more control of their space. There are several subtypes of Net Leases, including:

Absolute NNN Lease

With an Absolute NNN Lease, the tenant assumes full responsibility for the space, paying rent, utilities, taxes, insurance, and maintenance costs. The landlord has no financial obligations at all. These leases are typically very long-term for tenants with exceptional credit and are very rare.

Triple Net or NNN Lease

In a Triple Net Lease, the tenant pays rent, utilities, and a proportionate share of all building operating expenses, including maintenance fees.

Double Net or NN Lease

With a Double Net or Net Net Lease, the tenant pays rent, utilities, and a portion of property taxes and insurance. The landlord pays for all structural maintenance costs.

Single Net or N Lease

With a Single Net Lease, the tenant pays for rent, utilities, and a portion of property taxes. The landlord pays for insurance, maintenance, and repairs.

3. Percentage Lease

With a percentage lease, the tenant pays rent and a percentage of their gross sales. The landlord typically pays taxes, insurance, and maintenance fees. These types of leases are common in commercial retail settings, like shopping malls.

While these are the basic types and common modifications of commercial real estate
leases, it is important to remember that every contract is negotiable, and every commercial real estate lease is unique. Consult an experienced New York commercial real estate lease attorney to determine the best type of lease for your business and then negotiate the best terms for your needs.