Gross Lease
In a gross lease, the landlord pays property taxes, insurance, and maintenance out of collected rent, and the tenant pays a single flat rent figure — the opposite of a triple net lease. A modified gross lease splits the difference: the tenant typically reimburses some expenses, often increases over a base year, while the landlord retains others.
Because the landlord absorbs operating costs, gross-leased buildings carry higher operating expense ratios than NNN properties, and NOI is more sensitive to expense inflation — a spike in insurance or utilities falls directly on the owner rather than passing through to tenants.
Gross and modified gross structures are typical in multifamily and traditional office leasing, where itemized per-tenant expense reimbursement would be administratively impractical or simply doesn't match market-quoting norms. Lenders re-underwrite gross-leased NOI more conservatively, since expense growth isn't contractually capped for the owner.