What Is a Full Service Gross Lease?

Commercial real estate leases define the financial and operational responsibilities between a property owner and a tenant. Among various types, the full service gross lease is a common arrangement that simplifies financial aspects for the tenant by consolidating many expenses into a single, predictable payment.

Understanding the Full Service Gross Lease

A full service gross lease is a commercial lease agreement where the tenant pays a single, all-inclusive rent payment. This means the tenant remits a fixed amount each month, and the landlord covers most of the building’s operating expenses. The term “gross” refers to this single, comprehensive payment that encompasses various property costs.

The “full service” aspect indicates that the landlord is responsible for managing and paying for the majority of the property’s general operating expenses. This arrangement simplifies financial planning for tenants, as they can budget for a predictable monthly occupancy cost. This lease type is common in multi-tenant office buildings, where shared services and centralized management are efficient.

This structure shields the tenant from direct increases in many operating costs, offering budget predictability. Landlords factor anticipated expenses and a margin for potential increases into the base rent amount. Specific lease terms can define exclusions or conditions, such as an “expense stop” where the tenant might be responsible for increases beyond a certain threshold.

Expenses Included in Rent

Under a full service gross lease, the tenant’s single, all-inclusive rent payment covers several categories of property operating expenses. This includes property taxes, which the landlord manages and integrates into the tenant’s rent.

Building insurance premiums, protecting the property against risks such as fire or other perils, are also covered by the landlord and included in the rent. Common Area Maintenance (CAM) fees fund the upkeep and operation of shared spaces within the property, including lobbies, hallways, restrooms, parking lots, landscaping, and sometimes security services.

Utilities, such as electricity, water, heating, and air conditioning, are part of the bundled rent, particularly for common areas and, in many cases, the tenant’s individual space. Janitorial services for common areas are provided by the landlord, and sometimes this extends to cleaning the tenant’s leased premises. The landlord assumes responsibility for routine repairs and maintenance of the building’s structure and systems.

Tenant’s Separate Costs

While a full service gross lease offers significant convenience by bundling many costs, it does not cover every expense a business incurs. Tenants remain directly responsible for their own specific operational costs, which are not related to the general upkeep of the building. These include services and items unique to the tenant’s business operations.

One common expense not covered is the tenant’s direct internet and telecommunications services. Businesses arrange and pay for their own dedicated phone lines, internet access, and other data services. Any specialized build-outs or tenant improvements beyond the landlord’s standard finishes, which are specific modifications or renovations to the leased space, are also the tenant’s financial responsibility. This can include custom office layouts, specialized wiring, or unique fixtures.

Tenants are also responsible for obtaining insurance for their own personal property within the leased space and for their business operations, known as renter’s insurance or business liability insurance. This type of coverage protects the tenant’s assets and business activities. Additionally, any specific permits, licenses, or regulatory compliance fees required for the tenant’s particular business operations are solely the tenant’s obligation.