Businesses comparing office, retail or other commercial space in Metro Detroit often see rents advertised as “$18 per square foot NNN,” “modified gross” or “full service.” Those phrases describe how building costs may be divided between the owner and tenant. They do not, by themselves, tell you what you will pay each month.
NNN vs. Modified Gross vs. Full Service: Quick Comparison
| Lease structure | What quoted rent often covers | What may be added | What to confirm |
|---|---|---|---|
| Triple net (NNN) | Base rent for the premises | Tenant share of real estate taxes, building insurance and operating or common-area expenses; utilities may also be separate | Expense estimates, annual reconciliation, exclusions, caps, major repairs and maintenance |
| Modified gross | Base rent plus an agreed selection of operating costs | Items specifically excluded from rent, such as utilities, cleaning or some expense increases | Exactly which costs are included and who pays any increase |
| Full-service gross | Base rent plus a broader package of building operating services | Possible base-year or expense-stop increases, after-hours HVAC, excess utilities and separately charged services | Services included, operating-expense stop, hours and extra charges |
Important: these are common patterns, not universal legal definitions. A negotiated lease—and any attached exhibits—controls the actual responsibilities.
First, Understand the Rent Quotation
Commercial rates are commonly quoted in dollars per rentable square foot per year (SF/year), but confirm the unit and whether the building uses rentable or usable area. Monthly base rent is commonly calculated as:
Base rent formula
Rentable SF × Annual rate ÷ 12 = Estimated monthly base rent.
For example, 2,000 rentable SF at $18/SF/year gives $36,000 per year, or $3,000 per month in base rent before any separately billed expenses.
Figures are illustrative calculations, not current Metro Detroit market quotes.
What Is a Triple-Net (NNN) Lease?
A typical NNN commercial lease requires the tenant to pay base rent plus a proportionate share of property taxes, property insurance and building or common-area operating costs. The latter may include landscaping, snow removal and other shared services, but the items that qualify are defined by the agreement.
Ask whether those expenses are billed from an annual budget, when actual costs are reconciled and whether there are any exclusions or negotiated limits. Separately metered utilities, janitorial services, repairs and equipment replacement can be additional obligations depending on the lease.
What Is a Modified Gross Lease?
A modified gross commercial lease is a negotiated blend. An owner might include taxes and building insurance in the quoted rent while charging the tenant for electricity, cleaning or a share of maintenance. A different modified gross lease may allocate those same costs differently.
That flexibility is why “modified gross” is not a sufficient answer to “What's included?” Request an itemized cost schedule and the clause explaining which party pays for cost increases.
What Is a Full-Service Gross Lease?
A full-service gross lease generally bundles more operating expenses into the quoted rent, often making the starting monthly figure easier to anticipate. Some office leases still require a tenant to pay increases over a stated base year or expense stop.
Clarify whether in-suite cleaning, utilities, ordinary building operating costs and HVAC during business hours are included. Confirm what happens if the business needs evening or weekend heating and cooling.
Example: Comparing Two Lease Offers
Same 2,000 SF, different quoted rents
Offer A — NNN: $18/SF/year base rent + estimated $6/SF/year in reimbursable expenses = $4,000/month before any additional separately charged items.
Offer B — Full service: $23/SF/year = approximately $3,833/month at the starting quoted rate, subject to any exclusions and expense increases in the lease.
Despite the lower base rent, Offer A starts approximately $167/month higher on these assumptions. The full-term comparison could change if expenses, increases, included services or repair responsibilities differ.
Illustrative arithmetic only. These figures are not BLD listings, current asking rents, or a prediction of future costs.
How CAM and Operating-Expense Reconciliations Work
CAM stands for common-area maintenance. In many properties, tenants pay estimated monthly operating charges and receive a year-end statement comparing those estimates with actual eligible expenses. A reconciliation can lead to an additional payment or a credit, depending on the lease.
Ask to review the CAM definition, allocation method, prior operating-expense history when available, administrative fees, audit or review rights, and treatment of major capital items. For more, see What Is CAM in a Commercial Lease?
What to Ask Before Signing a Commercial Lease
- Is the quoted rate annual or monthly, and based on rentable or usable square footage?
- Which taxes, insurance, CAM, utilities, cleaning and repairs are included in base rent?
- What charges are estimated, reconciled or increased annually?
- Are there expense stops, base years, management fees or caps on controllable expenses?
- Who maintains the HVAC, roof, structure and major building systems?
- How are rent escalations, renewal options, deposits and permitted uses documented?
- Are improvements or tenant improvement allowances part of the package?
- What is the anticipated total occupancy cost over the lease term?
Comparing Office and Retail Space in Metro Detroit
Two seemingly similar properties in Oakland or Macomb County may have different lease economics because of age, configuration, parking, mechanical systems or included services. Before deciding based on a single quoted rate, compare the complete budget and whether the space can support the business without major additional work.
Our Metro Detroit office leasing cost guide covers deposits, utilities and other budget items. If you are actively evaluating properties, tell BLD what space you need.
Common Commercial Lease Questions
Does NNN mean the tenant pays every repair?
Not automatically. NNN describes common operating-expense allocations, but responsibility for roof, structure, HVAC and capital replacements depends on the agreement.
Is a gross lease always a fixed monthly payment?
No. Rent escalations, expense stops, after-hours services and other exclusions can still change the amount due.
Which commercial lease type is best?
There is no universal best structure. The better choice is the documented, predictable total cost and allocation of risk that fits the specific property and business.
Compare the responsibilities, not just the labels.
A lease at $18/SF NNN and a lease at $23/SF full service are not directly comparable until taxes, insurance, CAM, utilities, improvements and annual increases are put on the same schedule.
The Bottom Line
NNN, modified gross and full-service leases are different ways to allocate commercial property expenses. Use the lease documents—not the marketing shorthand—to calculate what the tenant is expected to pay. Involve appropriate legal and financial professionals before signing a binding agreement.