A gross lease, sometimes called a full-service lease, is a commercial lease in which the tenant pays a single, all-inclusive rent and the landlord pays the property’s operating expenses. Those expenses usually include property taxes, building insurance and maintenance, and often utilities and janitorial service.
Most residential leases work like gross leases, but the term is used mainly in commercial real estate, especially for office buildings.
How it works
The landlord estimates the building’s operating costs and builds them into the rent. The tenant gets a predictable monthly payment and does not see separate bills for taxes or common area maintenance.
Many gross leases still include protections for the landlord, such as:
- Expense stops or base years. The landlord covers costs up to a set level, and the tenant pays its share of increases above it. Leases with this feature are often closer to a modified gross lease.
- Annual rent escalations of a fixed amount or percentage.
- Exclusions for tenant-specific costs, like after-hours HVAC or extra electricity.
Example
A hypothetical tenant leases 3,000 square feet of office space at a gross rent of $36 per square foot per year. They pay $108,000 a year, or $9,000 a month. If property taxes rise by $5,000 the next year, the landlord absorbs the increase unless the lease includes an expense stop.
Pros and cons
For tenants: simple budgeting and less administrative work, but the rent per square foot is usually higher because it includes expenses.
For landlords: a more attractive offer to tenants and fewer reconciliations, but the landlord carries the risk of rising costs.
Why it matters for landlords
Gross leases put cost control on your side of the table. Price them with realistic expense estimates and include escalations so rising taxes and insurance do not erode your net operating income. Compare offers against a triple net lease structure to understand the real difference in income. Our commercial lease guide explains each structure, and TenantLoop commercial property management supports gross, modified gross and net leases.
Related terms
Related questions.
Who pays property taxes under a gross lease?
The landlord. Taxes, building insurance and maintenance are built into the single rent the tenant pays, unless the lease adds an expense stop or a base year.
Why is rent per square foot higher on a gross lease?
Because it includes the operating expenses the tenant would pay separately under a net lease. Compare the total cost, not just the rate.
How do landlords protect themselves from rising costs on a gross lease?
With annual rent escalations, an expense stop or base year that passes increases above a set level to the tenant, and exclusions for tenant-specific costs such as after-hours HVAC.