Industrial Gross Lease

Pros

• +Predictable base cost with only utilities and janitorial as variable expenses
• +Landlord retains structural risk — no surprise roof or parking lot assessments
• +Simple structure appropriate for operational focus of industrial tenants
• +Clearer expense delineation than NNN for warehouse operators

Cons

• −Higher base rent than NNN industrial leases
• −Utility costs in large warehouse operations can be significant
• −Less control over maintenance quality than NNN tenants
• −Dock equipment and specialized fixtures may have unclear responsibility

Pros

• +Retains control of structural elements critical to building value
• +Higher base rent compensates for absorbed structural costs
• +Tenant utility metering eliminates dispute over utility allocation
• +Suitable for multi-tenant industrial buildings with shared infrastructure

Cons

• −Structural maintenance and roof replacement are significant expense risks
• −Property condition depends on landlord maintenance — affects building value
• −No mechanism to pass through tax or insurance increases mid-term
• −Industrial roof replacements can cost $500,000 to $2,000,000+