NNN vs Gross Leases in Fort Worth: What Tenants Often Miss

NNN vs Gross Leases in Fort Worth: What Tenants Often Miss

One of the most critical, and most frequently misunderstood, aspects of commercial real estate is lease structure. The difference between a Triple Net (NNN) lease and a Gross lease can translate to thousands of dollars annually.

The Basics: What Are You Actually Paying?

At its core, the distinction between lease types comes down to one question: Who pays the operating expenses?

Commercial Property Operating Expenses Include:

• Property taxes
• Property insurance
• Common area maintenance (CAM)
• Repairs and maintenance
• Management fees
• Utilities (sometimes)

These expenses in Fort Worth typically run $2.50-$4.50 per square foot annually.

Triple Net (NNN) Leases Explained

In a Triple Net lease, the tenant pays:

1. Base Rent - The quoted per-square-foot rate
2. Property Taxes - Your proportionate share
3. Insurance - Building insurance allocated to tenants
4. CAM - Common area maintenance costs

Example: 10,000 SF retail space at $22.00 NNN:

• Base rent: $220,000
• Expenses (~$4.00 PSF): $40,000
• Total: $260,000 annually

Gross Leases Explained

In a Gross lease, the landlord pays operating expenses built into the quoted rent.

Example: Same 10,000 SF at $26.00 Gross = $260,000 annually (landlord handles expenses from this)

But there is a catch: Gross leases often include base year or expense stop provisions where you pay increases above a baseline.

What Fort Worth Tenants Miss

1. Comparing Apples to Oranges The most common mistake: comparing a $22.00 NNN quote to a $26.00 Gross quote without adding expenses to NNN.

2. Ignoring Property Tax Increases Fort Worth property taxes are rising, and Tarrant County appraisal increases have been steep in recent years.

3. Not Auditing Operating Expenses You have the right to audit expense statements, and audits regularly turn up errors.

Which Lease Type Is Better?

NNN May Be Better If:

• You want maximum control over costs
• You prefer transparent add-ons
• Your space is standalone

Gross May Be Better If:

• Budget predictability is paramount
• You prefer administrative simplicity
• You are concerned about rising property taxes

Contact Daniel Weber to discuss your Fort Worth commercial lease needs.