Browse Lease Types & Structures Terms
Industrial leases come in several structures that determine who pays what. Understanding these structures before you negotiate can save significant money over the life of a lease.
Triple Net Lease (NNN)
The most common industrial lease structure, where the tenant pays base rent plus property taxes, building insurance, and maintenance costs in addition to their own utilities.
View definition →Double Net Lease (NN)
A lease where the tenant pays base rent plus property taxes and insurance, while the landlord retains responsibility for major structural maintenance and repairs.
View definition →Gross Lease
A lease where the tenant pays a single all-inclusive rent amount, with the landlord covering operating expenses such as taxes, insurance, and maintenance from that income.
View definition →Modified Gross Lease
A hybrid structure where some operating expenses are included in the base rent while others — typically utilities or janitorial costs — are passed directly to the tenant.
View definition →Industrial Gross Lease
A common industrial lease variation where the landlord covers property taxes and insurance but the tenant is responsible for utilities and interior maintenance costs.
View definition →Full-Service Lease
A lease where the landlord covers all operating expenses — taxes, insurance, maintenance, and utilities — within the base rent, most common in office but occasionally used in flex space.
View definition →Absolute Net Lease
The most landlord-favourable structure, where the tenant assumes responsibility for all property expenses including structural repairs, roof replacement, and major capital costs.
View definition →Ground Lease
A long-term lease of land only, where the tenant constructs and owns the building during the lease term, typically reverting to the landowner at expiration.
View definition →Short-Term Lease
A lease with a term of one to three years, offering operational flexibility for the tenant but typically at higher per-square-foot rental rates than longer commitments.
View definition →Month-to-Month Lease
A lease without a fixed end date that renews automatically each month, providing maximum flexibility but at a premium rent rate and with limited landlord commitment.
View definition →Lease Term
The total duration of the lease agreement, expressed in months or years; longer terms typically yield lower rents, greater TI allowances, and other landlord concessions.
View definition →Lease Commencement Date
The date on which the lease officially begins and all tenant obligations — including insurance and compliance requirements — take effect, even if rent has not yet started.
View definition →Rent Commencement Date
The date rent payments actually begin, which may differ from the lease commencement date when the tenant is granted a free rent period to complete fit-out.
View definition →Free Rent Period
A landlord concession granting the tenant occupancy without paying base rent for a defined period, typically used to offset move-in costs or construction time.
View definition →Base Rent
The core periodic rent payment due under a lease, exclusive of operating expense pass-throughs, percentage rent, or any other additional charges.
View definition →Asking Rent
The rent rate listed or advertised by the landlord — the starting point for negotiation that may differ materially from the final executed or effective rent.
View definition →Effective Rent
The average rent actually paid over the full lease term after accounting for free rent periods, abatements, and landlord concessions — a more accurate measure than face rent.
View definition →Escalation Clause
A lease provision that increases base rent at defined intervals — either by a fixed percentage or tied to an index such as CPI — to protect the landlord against inflation.
View definition →Fixed Escalation
A predetermined percentage increase in rent at set intervals — commonly 2% to 3% annually — providing predictability for both the landlord and tenant over the lease term.
View definition →CPI Escalation
Rent increases tied to changes in the Consumer Price Index, ensuring rent growth tracks general inflation rather than a fixed rate agreed at lease signing.
View definition →Holdover Clause
A provision defining the tenant's obligations if they remain in the space after lease expiration, typically at 150% of final month's rent on a month-to-month basis.
View definition →Renewal Option
A contractual right giving the tenant the ability to extend the lease for an additional term at a pre-agreed rent or at then-current market rent.
View definition →Right of First Refusal (ROFR)
A lease provision allowing the tenant to match any third-party offer on adjacent space or the building before the landlord accepts a competing offer.
View definition →Right of First Offer (ROFO)
A provision requiring the landlord to offer available space to the existing tenant first, at terms the landlord sets, before marketing it to third parties.
View definition →Early Termination Clause
A lease provision allowing the tenant to exit before the natural lease expiration, typically by paying a defined termination fee that reimburses unamortised landlord costs.
View definition →Sublease
An arrangement where the original tenant leases part or all of their space to a new party for the remaining term, typically requiring landlord consent.
View definition →Assignment of Lease
A transfer of all of the original tenant's rights and obligations to a new tenant, effectively substituting one tenant for another with landlord approval.
View definition →Co-Tenancy Clause
A lease provision granting a tenant rent reductions or termination rights if a key anchor tenant in a shared industrial complex or park vacates the development.
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