Commercial rent structures differ in who bears operating costs and how the rent responds to the tenant’s performance.
Gross lease. The tenant pays one rent; the landlord absorbs taxes, insurance and operating costs, usually with an expense stop above which increases pass through.
Net leases. The tenant pays base rent plus a share of some or all of taxes, insurance and maintenance. In a triple net lease the tenant bears all three; absolute net leases add structural and roof obligations, and the difference should never be left to the label.
Percentage rent. Common in retail: base rent plus a percentage of gross sales above a breakpoint. Definitional questions dominate — whether online orders fulfilled from the store count, whether returns and employee discounts are deducted, whether gift card sales count on issue or redemption. Audit rights and record retention obligations belong in the clause.
Operating expense exclusions are the negotiated core of a net lease: capital expenditures except as amortised, costs recovered from insurance or other tenants, leasing commissions, landlord’s financing costs, and expenses for other properties.
Base year and gross-up provisions in office leases can create substantial unintended increases when occupancy changes, and should be modelled rather than accepted as boilerplate.