Gross Lease

GRS

Gross leases: tenant pays one fixed rent, landlord covers all expenses. Learn differences from full service gross, NNN, and key lease terms.

By Angel Campa, Founder · Updated March 2026

Overview

A Gross Lease requires the tenant to pay a single fixed rent amount, and the landlord pays all operating expenses from that gross rent. The tenant has maximum cost certainty and no exposure to expense volatility. Gross leases are common in older office buildings, some industrial properties, and smaller commercial spaces where landlords prefer simplicity over expense optimization.

Expense Breakdown

Tenant Pays

  • •Base gross rent (fixed, all-inclusive)
  • •Their own contents and liability insurance
  • •Above-standard utility usage in some cases

Landlord Pays

  • •Property taxes
  • •Building insurance
  • •Common area maintenance
  • •HVAC maintenance and replacement
  • •Utilities (electric, water, gas)
  • •Roof and structure maintenance
  • •Janitorial services
  • •Landscaping
  • •Parking lot maintenance
  • •Security

Typical Profile

Typical Industries

Older Office BuildingsSmall Commercial SpacesIndustrial (older stock)Retail (smaller properties)

Typical Term Length

1–5 years

Pros & Cons

For Tenant

Pros

  • +Maximum cost certainty — one payment, no surprises
  • +Simplest lease structure to administer
  • +No exposure to rising taxes, insurance, or maintenance costs
  • +Landlord absorbs all operating risk

Cons

  • −Higher base rent than net lease structures
  • −Less transparency into building operating costs
  • −No ability to control or reduce operating costs
  • −Landlord has less incentive to be cost-efficient

For Landlord

Pros

  • +Simple to administer with no annual reconciliations
  • +Predictable tenant relationships — fewer disputes over expenses
  • +Attractive to smaller or less sophisticated tenants
  • +Higher base rent compensates for absorbed operating costs

Cons

  • −Bears full risk of unexpected operating cost increases
  • −Rising costs compress net income over the lease term
  • −No mechanism to pass through tax, insurance, or utility spikes
  • −Incentive to defer maintenance to preserve income margin

Critical Fields to Abstract

These are the highest-priority fields Lextract extracts from GRS leases. Click any field to learn what it means and why it matters.

Base RentRent Commencement DateLease Expiration DateOperating ExpensesInsurance RequirementsRenewal OptionsTermination OptionsPermitted UseSubletting RightsAssignment Rights

Common Red Flags

Lextract automatically detects these red flags in GRS leases. Click any flag to learn the impact and what to do.

Missing Audit RightsNo Renewal OptionNo Termination OptionAggressive Holdover RateShort Cure Period

Compare With

Modified Gross Lease

View expense breakdown and red flags →

Full Service Gross Lease

View expense breakdown and red flags →

Net Lease

View expense breakdown and red flags →

Nnn Lease

View expense breakdown and red flags →

Frequently Asked Questions

What does the tenant pay in a gross lease?

In a gross lease, the tenant pays only the fixed base rent. The landlord pays all operating expenses including property taxes, building insurance, maintenance, utilities, janitorial, and HVAC. The tenant has no additional financial obligations beyond the stated rent amount.

Is a gross lease better for tenants than a NNN lease?

For tenants who want simplicity and cost certainty, gross leases are preferable. However, the base rent in a gross lease will be higher than in a NNN lease to compensate the landlord for absorbing operating expenses. Whether a gross lease is "better" depends on the actual operating cost levels and the tenant's ability to manage and control expenses in a NNN structure.

What is the difference between a gross lease and a full service gross lease?

A gross lease typically has no expense pass-through mechanism — the landlord bears all operating costs for the entire lease term. A full service gross (FSG) lease includes an expense stop provision that allows the landlord to pass through operating expense increases above a base year threshold. FSG is more common in institutional office buildings; gross leases appear more in older or smaller properties.

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