Gross Lease (Full Service)
A lease structure where the tenant pays a single rental amount and the landlord covers all operating expenses including taxes, insurance, and maintenance.
Definition
A Gross Lease (also called Full Service Lease) is a commercial lease agreement where the tenant pays one flat rental amount and the landlord is responsible for all property operating expenses—property taxes, building insurance, maintenance, and often utilities. This structure is simple for tenants since they write one predictable check, but it exposes landlords to expense volatility. If taxes or insurance spike, the landlord absorbs the increase. Gross leases are common in office buildings but rare in small bay industrial due to the expense risk and lower property valuations they produce.
Example
A tenant signs a gross lease at $18/SF. That's their total occupancy cost—the landlord pays all taxes, insurance, and CAM from that amount. If operating expenses rise from $4/SF to $5/SF, the landlord's NOI drops.