Working through the NNN vs. gross lease decision starts with knowing exactly what each structure asks of you before you commit to either one.
An NNN lease, also called a triple net lease, means the tenant covers property taxes, building insurance, and maintenance in addition to base rent. Base rent under an NNN lease usually runs lower than a comparable gross lease, since the landlord isn’t pricing those pass-through costs into the rent itself. This structure is common in single-tenant industrial buildings, where the tenant essentially runs the property as if they owned it, and an NNN lease exposes the tenant to costs like a reassessed tax bill or an unexpected roof repair.
A gross lease works the opposite way. You pay one flat rent figure, and the landlord absorbs property taxes, insurance, and most operating costs out of that revenue, which makes monthly budgeting far more predictable. Gross leases show up most often in multi-tenant office buildings, where landlords want standardized terms across many suites, and that predictability is priced into a higher base rent than you’d see on an equivalent NNN lease. Either way, base rent by itself doesn’t tell you your full occupancy cost, which is exactly why comparing lease types on rent per square foot alone can be misleading.
Modified gross lease structures split the difference between those two extremes, and they’re more common than most lease comparisons let on.
The landlord typically covers property taxes and insurance under a modified gross lease, while the tenant pays a proportional share of common area maintenance and utilities tied to their suite. This is the most common structure in standard office space, even though most comparisons skip straight from an NNN lease to a gross lease and leave modified gross out entirely. Landlords sometimes offer different lease structures for different suites in the same building depending on their capital position, so it’s worth asking Hokanson’s landlord representation team why a particular building is structured the way it is before you assume the terms are fixed. That gap between a modified gross lease and either extreme is also where most of the real negotiation happens, since the expense split isn’t standardized the way base rent typically is.
The clearest way to compare these structures is expense by expense, since the labels alone can hide how different the actual bill looks from one lease to the next.
Property type shapes what you’ll be offered before negotiations even start, and Indiana’s mixed inventory of building ages makes this worth confirming rather than assuming.
Multi-tenant office buildings, especially older downtown Indianapolis stock versus newer suburban Class A space, lean toward gross or modified gross leases, and even similar buildings a few miles apart can carry different norms. Industrial and logistics buildings lean toward an NNN lease structure, since single-tenant occupants are used to controlling the whole facility and prefer the lower base rent that comes with it. Medical office leases often land in between, shaped by the cost of healthcare-specific buildouts and by whether the medical property is single-tenant or shared among practices.
Hokanson’s tenant representation team negotiates NNN lease, gross lease, and modified gross deals across Indiana and the Midwest every week, and can walk through exactly what you’re being offered before you sign.
The lease type on the cover page doesn’t tell the whole story once CAM charges and tax reassessments start compounding over a multi-year term, and this is the step most tenants skip when they’re comparing offers side by side.
A lower face rent on an NNN lease can end up costing more than a higher headline rate on a gross lease once CAM increases and a property tax reassessment or two compound over several years. Ask whether CAM charges are capped, and get the prior year’s actual operating expense numbers, not just the landlord’s estimate, before comparing offers side by side. It also matters how the escalation is written: a fixed annual bump is easy to project, while an uncapped pass-through on a modified gross or NNN lease can move your total cost well past what the first-year number suggested.
An NNN lease doesn’t automatically mean cheaper rent, and a gross lease doesn’t automatically mean no hidden costs. Many gross leases include a base year or expense stop clause, where costs above a set baseline get passed to you anyway, so it’s worth reading that clause as closely as you’d read an NNN lease’s expense list. Once you’re ready to talk specifics, Hokanson’s guide to commercial lease negotiation covers tenant improvement allowances, renewal options, and the terms worth pushing back on before you sign.
Choosing between an NNN lease, gross lease, and modified gross lease comes down to which tradeoffs fit your growth plans and how much cost predictability you actually need. Hokanson Companies has represented tenants and landlords across office, industrial, and medical real estate throughout Indiana and the Midwest since 1938, and we’ve negotiated every version of this decision from both sides of the table. Whether you’re renewing an existing lease or signing your first one in a new market, that experience means fewer surprises once you’re a few years into the term. Reach out to talk through your specific lease options before you sign.
https://www.hokansoninc.com/wp-content/uploads/2022/08/03_Vectren-Hdqtrs_1024x680.jpg 680 1024 Abstrakt Marketing /wp-content/uploads/2026/01/Vertical-logo.svg Abstrakt Marketing2026-07-19 03:25:542026-07-19 03:25:58How to Conduct a Lease Audit on Your Commercial Property https://www.hokansoninc.com/wp-content/uploads/2026/06/Modern-Hospital-Building-With-Glass-Windows.jpg 1250 2000 Abstrakt Marketing /wp-content/uploads/2026/01/Vertical-logo.svg Abstrakt Marketing2026-06-05 09:00:002026-06-04 16:55:10Medical Real Estate in Transition: The Transition to Outpatient Care for Owners and Operators https://www.hokansoninc.com/wp-content/uploads/2026/06/A-modern-white-concrete-and-blue-glass-office-building.jpg 1250 2000 Abstrakt Marketing /wp-content/uploads/2026/01/Vertical-logo.svg Abstrakt Marketing2026-06-04 17:05:522026-06-04 17:05:58Subleasing Commercial Property: A Guide for Both Tenants and Landlords https://www.hokansoninc.com/wp-content/uploads/2026/04/Property-Management-Strategies-to-Boost-Revenue.jpg 1250 2000 Abstrakt Marketing /wp-content/uploads/2026/01/Vertical-logo.svg Abstrakt Marketing2026-04-04 03:06:352026-05-05 13:03:18Property Management Strategies to Boost Revenue in Multitenant Office Buildings https://www.hokansoninc.com/wp-content/uploads/2026/04/Tenant-Turnover-Checklist-for-Multitenant-Office-Building.jpg 1250 2000 Abstrakt Marketing /wp-content/uploads/2026/01/Vertical-logo.svg Abstrakt Marketing2026-04-04 02:53:012026-05-05 13:03:18Tenant Turnover Checklist for Multitenant Office Buildings: Is Your Property Ready? https://www.hokansoninc.com/wp-content/uploads/2026/04/Full-Service-Property-Management-Means-for-Multitenant-Office.jpg 1250 2000 Abstrakt Marketing /wp-content/uploads/2026/01/Vertical-logo.svg Abstrakt Marketing2026-04-01 02:17:362026-05-05 13:03:18What Full-Service Property Management Means for Multi tenant Office Buildings https://www.hokansoninc.com/wp-content/uploads/2025/11/The-exterior-facade-of-a-generic-small-business.jpg 1250 2000 Ike Oji /wp-content/uploads/2026/01/Vertical-logo.svg Ike Oji2025-11-10 10:06:462026-05-05 13:03:18AI vs. Human Expertise: The Future of Commercial Real Estate https://www.hokansoninc.com/wp-content/uploads/2025/11/An-office-building-with-glass-windows-on-a-sunny-day.jpg 1250 2000 Ike Oji /wp-content/uploads/2026/01/Vertical-logo.svg Ike Oji2025-11-10 10:05:562026-05-05 13:03:19How AI is Reshaping Tenant Representation in Commercial Real Estate https://www.hokansoninc.com/wp-content/uploads/2025/10/The-Role-of-Professional-Brokers-in-Commercial-Lease-Negotiation.jpg 1250 2000 Ike Oji /wp-content/uploads/2026/01/Vertical-logo.svg Ike Oji2025-10-29 15:39:062026-05-05 13:03:19The Role of Professional Brokers in Commercial Lease Negotiation