Notes & updates: None currently.

Categories of Commercial Leases

Flat or Fixed Leases

  • Rental rate fixed over an explicit period of time

Gross Leases

  • Tenant pays flat monthly amount.
  • Landlord pays operating costs of the building and property.
  • Tenant may pay for electricity, heat, and air conditioning.
  • May contain an escalation clause that would allow the landlord to incrementally increase rental rates periodically to offset expenses.

Step Leases

  • Rent is increased at a predetermined rate periodically over the life of the lease.
  • Purpose is to meet the landlord’s predictable increases in costs.
  • Increase is based on projected costs instead of actual costs.

Cost of Living Leases

  • Rental increases correspond to cost of living increases.
  • Rent increases usually correlate to generic inflation.

Net Leases

  • Tenant pays base monthly rent plus some or all expenses.
  • Increases based on real costs instead of on projections.
  • Rent increases when the landlord incurs additional expenses.
  • Tenant may pay property taxes.
  • Tenant pays utility and expenses in proportion to the space leased and the services used.

Net-Net Leases

  • Tenant pays base amount, property taxes, and insurance premiums.
  • Insurance premiums and property taxes are due according to the proportion of space leased.

Net-Net-Net Leases

  • Tenant pays base amount plus landlord’s operating expenses.
  • Usually includes property taxes, insurance premiums, maintenance, and repairs.

Percentage Leases

  • Tenant pays base plus percentage of gross income, or the greater of the base amount or percentage of gross income.

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Areas of Representation

We represent clients in the following areas (and around all of Minnesota):