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How to Calculate lease rates – NNN – Modified Gross – Full Service Gross

There are three main types of lease rates, but a landlord’s interpretation of these different types can vary.  This is a basic overview of each of these types:

 

NNN – Triple Net – With this type of lease rate you have a base rental rate plus the three Ns.  One “N” stands for property taxes, and other for property insurance, and the final “N” stands for the common area expenses (CAMs).  Included in CAMs are typically the parking lot lights, snow removal, maintenance of common areas (hallways, restrooms, etc).  These charges are lumped together to provide one estimated rate for that year.  One might see a property of this type advertised as:

 

Lease rate: $5.00/SF/YR NNN    (NNN = $3.25)

This means that if you are renting a space that is 1,000 SF then your rent per month will be: $687.50/mo plus utilities. 

 

 

MG - Modified Gross – In this type of lease rate one would have the base rent and the NNN expenses already accounted for.  So, the only extra charge would be the utilities.  One might see a property of this type advertised as:

 

Lease rate: $10.00/SF/YR MG

This means that if you are renting a space that is 1,000 SF then your rent per month will be: $833.33/mo plus utilities. 

 

 

FSG – Full Service Gross – This type of lease rate has all expenses included in the lease rate.  Therefore the lease rate includes the base rent, the NNN expenses, and the utilities.  Most FSG leases are a “base year FSG lease.”  One might see a property of this type advertised as:

 

Lease rate: $15.00/SF/YR FSG

This means that if you are renting a space that is 1,000 SF then your rent per month will be: $1250/mo.

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