CRE glossary
Full-service (gross) lease
A full-service lease (also called a gross lease) is a commercial-lease structure where the landlord pays all operating expenses, taxes, insurance, CAM, janitorial, utilities, and the tenant pays a single all-in base rent. It's the simplest structure for the tenant and most common in trophy NYC, Chicago, and Boston office buildings.
Full-service is the cleanest structure for a tenant: one rent check, no reconciliations, no expense disputes. The landlord absorbs all operating-cost variability. For that simplicity, base rent is 30–50% higher than the NNN equivalent, landlords have to price in their own risk.
Pure full-service is rarer than people think. Most 'full-service' leases include pass-through language for utility increases over a base year, real estate tax increases over base, or operating-cost spikes triggered by major repairs. These are all variations of an expense stop, see modified gross. Confirm exactly what's included before treating the lease as a true gross.
Tenants often prefer full-service for cash-flow predictability, especially when rent is a small percentage of revenue (law firms, consulting, financial services). Tenants where rent is 5%+ of revenue (early-stage startups, retail) usually prefer modified gross or NNN with caps because the math justifies the operational complexity in exchange for lower base rent.
Example
- Year 1 full-service rent
- $95/SF
- What's included
- Base + taxes + insurance + CAM + janitorial + electric
- What's NOT included (typical)
- After-hours HVAC, supplemental electric, telecom
- Year 2 with 3% escalation
- $97.85/SF
Broker perspective
Full-service is great for the principal who wants a predictable budget line and the rep who wants a fast deal. Push for it on tenants where simplicity is worth the premium. For tenants squeezing every dollar (early-stage, retail), structure as modified gross with an expense stop and a 4-5% controllable cap on increases.
Frequently asked
People also ask
Are utilities included in full-service?
Standard utility allowance is included; over-standard (after-hours HVAC, supplemental) is metered to the tenant. Confirm specific carve-outs in the LOI.
Is full-service the same as modified gross?
No. Full-service includes everything in base rent (zero pass-throughs). Modified gross has pass-throughs over a base year.
Why is full-service rent higher?
Landlord absorbs all operating-cost risk. The premium covers landlord's cost-inflation exposure plus a profit margin for managing it.
Where is full-service most common?
Trophy assets in NYC, Chicago, Boston. West LA, San Francisco, Texas, and most secondary markets are NNN or modified-gross dominant.
Related terms
Modified gross lease
A hybrid where the landlord covers some operating expenses in base rent and passes through others, middle ground between full-service and NNN.
Triple net lease (NNN)
A lease where the tenant pays base rent plus their pro-rata share of property taxes, insurance, and CAM.
Base rent
The headline rent before pass-through expenses, usually quoted in $/SF/year and the starting point for every comp.
Operating expenses (OpEx)
All costs to run the building, taxes, insurance, utilities, janitorial, management, that get passed through to tenants in NNN and modified gross structures.
See full-service (gross) lease extracted from a real lease.
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