Read the fine print: What commercial lease structures actually mean
Every commercial lease comes down to one question: Who pays for what?
The base rent on a flyer only tells you part of the story. The lease structure behind that number determines whether your real occupancy cost is what’s printed on the page or something a good deal higher once operating expenses hit.
For landlords, that same structure decides how exposed you are to rising taxes, insurance and maintenance over the life of the lease.
I explain this to clients almost every week, so I wanted to break it down here in plain terms.
Full-service gross: The all-in number
This is the easiest one to explain to a tenant. The quoted rent covers everything – taxes, insurance, CAM (common area maintenance), utilities, janitorial – so you write one check, and the landlord handles the rest.
You’ll see this most often in multitenant office buildings, where it’s tough to fairly divide expenses across tenants using the space differently.
The catch for landlords is you’re carrying the risk if costs climb during the term, which is why most full-service leases build in a base year and an expense stop. Anything above that base year gets passed back to the tenant.
Modified gross: The middle ground
Modified gross splits the difference, and it’s the one I get the most questions about.
Base rent still covers most of the operating costs, but the tenant picks up something specific, usually utilities or janitorial, that gets carved out and negotiated directly.
There’s no standard definition here, which is exactly why it needs a closer look before you sign. I’ve seen two modifiedgross leases that looked nothing alike once you dug into what was actually carved out.
On the Western Slope, this is a popular structure for smaller industrial and flex buildings, where full NNN doesn’t quite
fit, but pure full-service asks the landlord to eat costs that should really be shared.
Triple net (NNN): The landlord’s shield
In a triple-net lease, the tenant pays base rent plus their share of the three «nets» – property taxes, building insurance and CAM – on top of their own utilities and interior upkeep. This is the standard structure for single-tenant retail, industrial and freestanding commercial space, because it protects ownership from swings in operating costs.
If you’re a tenant looking at an NNN listing, don’t stop at the quoted rent. Add in the CAM and tax pass-throughs, usually shown as «plus NNN» on the flyer, before you decide anything is or isn’t in budget.
Single net, double net, percentage leases
A single-net (N) lease has the tenant covering base rent plus property taxes, with the landlord still handling insurance and maintenance.
Double net (NN) adds insurance to the tenant’s side, but maintenance and structural items stay with the landlord.
You won’t see these as often as full gross or NNN, but they show up in saleleaseback deals and situations where a landlord wants to keep control over capital improvements while still shifting some cost to the tenant.
Retail leases add another wrinkle with percentage rent, a share of gross sales layered on top of base rent once sales cross a negotiated breakpoint, usually paired with an NNN structure.
Reading a listing like a broker
Here’s the thing I tell every first-time tenant: If you’re comparing a full-service gross space to a NNN space at the same quoted rent, you’re not actually comparing apples to apples. That NNN space has an added cost per square foot for taxes, insurance and CAM that has to get factored in first.
Walking someone through that real, all-in number is honestly half the job. Know which structure fits which asset class, and you’ll set realistic expectations whether you’re pricing a listing or evaluating one.
F
Matthew Parker is a commercial broker for Bray Commercial Real Estate.
Matthew Parker
Of blind squirrels and nuts, or as I say, politicians and varmints
Then again, I’m being redundant in that second part.
As I type today, I find myself in the middle of two iconic battles – well, maybe three if I count my rambunctious feline known as Nico and his never-ending mission to get into places I don’t want or desire him to be in, which is basically all he does in a given day besides sleep. Then again, Nico does sit on my lap and purr occasionally, so he gets a pass.
But not those dastardly ground squirrels in my back yard who have blindly decided the best place to build a nest is under the gas fireplace extension on the back of my humble abode. So, they are now marked for removal from the good life in my back yard and under my house. But no matter how much I take them out, they keep pulling me back in.
Truth told, this all started innocently enough (or better put, in my obliviousness) as one day I was out killing weeds with my favorite potion known as Roundup, and I looked along the back side of my home where a two-foot-tall mound of dirt had suddenly appeared. And I thought to myself, “I wonder what the lawn guys are doing over there?”
Kind of tells you how much knowledge and effort I put into my yard beyond playing the “Roundup Kid.”
Anywho, I came to discover this wasn’t the work of my industrious landscapers, but rather one “pain in the backside of my humble abode” ground squirrel. I mean, that little sucker moved a lot of dirt. More than I have in my 20 years of living here. One damned squirrel? Seriously?
Side note, if you ever want to know just how out of shape you are, just shovel around some dirt or stuff. I’m still sore from my latest project. Now, I know why my buddies Davey Boy and Chaz are in the shape they are in after retiring as “landscapers.” For the record, they did more than landscaping, and they are still in better shape than yours truly. But boy, they ache. More on that in a few.
So, what does Craigy do when faced with a formidable opponent that is smaller, but more tenacious, than Mr. Nico (who brings nothing to the table in the ridding of the rodent, btw) you ask? Simple, I ask others what to do, as I haven’t the slightest clue. The advice, set a trap, and use peanut butter when you do. Because while a blind squirrel may find a nut eventually, it will always find peanut butter, I guess.
Well, it worked like a charm. Problem solved? Hardly. That was five squirrels ago. And while my trap has no problem being reset to catch the next nut job crawling up my craw(lspace), Ol’ Craigy was at the point where he was about to grow a long, red moustache and go Yosemite Sam on these creeping critters of consternation.
But alas, instead of playing reruns of “To Catch a Crawlspace Critter,” I took the advice of the nice exterminator guy (who also killed the spider manifestation of the aforementioned crawlspace, so kudos to Jerry’s Pest Control) and did the humane thing and took away access to where my squirrel neighbors were squirreling away I bet at this point you may have asked what I do with the squirrels once I catch them. Let’s just say I send them off to their next life – do with that as you will.
But back to the subject of my soreness, and, so far, successful subjugation of said squirrels. First off, I cannot begin to describe how every inch of my body ached after digging my own personal Helm’s Deep around about 8 feet of fireplace footings, most of it on my hands and knees. And I still didn’t move as much dirt as that original damned squirrel. But moved dirt I did and then proceeded to place fencing mesh about 6 inches deep and a few “L-shaped” inches facing out to keep the pesky provocateurs from penetrating the perimeter.
Why just last night it appears we fended off two attacks of the Orcan offenders, and my outpost occupies the high ground. Or in this case, the low ground. So far, so good. But I’m gonna stay vigilant of these vivacious varmints, because where one once got in, another will surely try. Because what good is a varmint doing varmint-ing if it isn’t violating our life and livelihood? No wonder Yosemite was always in “varmint season.”
Which brings us, of course, to politicians. And yes, we should be removing them from office with the frequency of my backyard buddies and sending them into their next phase of life, which has more separation from public service than Phil Weiser’s front teeth. And in Colorado, nowhere is that more evident than our current run for replacing Pontius Polis in his perch of pontificating. Rarely has one man done so little for so many in such a small amount of time. Usually, you need a president to do this kind of damage.
But Polis was no piker when it comes to proliferating problems for you and me. Which brings me to the two, and only two, squirrels yelling squirrel about all the nuts running to try to replace Jared, who can actually win the governorship. And that would be failed televangelist Victor Marx (seriously with that last name?), who will heretofore be known as Foster Marx, because he always sounds like he’s on the dais of a Dean Martin Roast, and Phil Weiser who will be heretofore known as the Weiser Weasel, because he only sues entities he goes on junkets with, because paying off the Weasel a small percentage of profits is just a cost of doing business in Colorado. Frankly, just a little knowledge of either should have folks voting Greg Lopez just out of principle. After all, all we heard from opposition candidates in their own parties was another yelling, “Squirrel!!” when it came to pointing out another fault in the litany of faults as to why neither of these varmints should become governor. At least I’ve spoken with Greg in my lifetime, and while I don’t do endorsements, I know he cares about people and businesses in the exact opposite way our esteemed city councilman Jason Nguyen does not.
Sadly, as in pretty much any race of importance in American politics today, we only get to choose between the lesser of two, nut-job, interloping squirrels we don’t want to live under our house.
I suggest you start digging your trenches and fortifying your domains if you haven’t already. Because one of these squirrels is going to try to take over your property once elected. And even after we’re rid of that one, there are plenty more clawing and digging at our very life.
In Truth and freedom. F
Craig Hall is owner and publisher of The Business Times. Reach him at 424-5133 or publisher@thebusinesstimes.com
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Craig Hall
n Parade of Homes builders, sponsors, advertisers can register
The 45th Annual Parade of Homes, presented by the HBA of Western Colorado and Fairway Home Mortgage, will take place Sept. 25–27 and Oct. 2–4 at homes throughout Mesa County.
Registration is now open for builders, sponsors and advertisers looking to be part of the event and connect with thousands of prospective home owners, home buyers and remodeling enthusiasts.
“This is one of the best marketing opportunities of the year for builders and businesses in the home industry,” said Shayna Heiney, executive officer of the HBA of Western Colorado. “The Parade of Homes attracts motivated consumers who are looking to build, searching for ideas and products, as well as for the best professionals for their next home or remodeling project. We encourage builders of every size and every price point to participate and showcase the incredible work being done throughout our region.”
Parade of Homes tickets are $20 per person. Homes will be open for touring on Fridays and Saturdays from 10 a.m. to 6 p.m. and Sundays from 10 a.m. to 4 p.m. To learn more, call the HBA of Western Colorado at 970-245-0253 or email office@hbawesternco.com.
n Annual tour of Cedaredge homes returns Sept.
6
For the eighth year, the Grand Mesa Arts & Events Center and presenting sponsor radio station The Vault 100.7 will host a tour of Cedaredge homes and gardens. Tour de Cedars will take place on Sept. 6 from noon to 4 p.m.
Limited tickets are available. The cost is $65 per person or $50 for GMAEC members, with proceeds going to support the arts center. Tickets may be obtained at GMAEC, 195 W. Main St. in downtown Cedaredge. Tickets may also be purchased online at www.gmaec.org/ tour-de-cedars.
The fundraising event will feature visits to four homes where participants can: sample the culinary specialties of area chefs and caterers; taste wine or ciders provided by local vintners and cider makers; enjoy live music provided by area performers; view the work of local artists; and meet the artists.
For additional information, contact GMAEC at 970-856-9195 or email info@gmaec.org.
n Mesa County expands access to public notices online
As of July 1, Mesa County is now posting public notices on its website, providing residents with another way to access important public information, the county said in a July 6 news release.
Public notices include information about topics such as public hearings, elections, foreclosures, tax lien sales, contract notices and other actions that require public notification. The new webpage is intended to improve access to public notices by providing a centralized location where residents can view current notices online, the news release said.
State law continues to require many public notices to be published in a newspaper. Those requirements are not changing. The online notices page provides an additional way
for residents to access public notices and stay informed about county government actions and opportunities for public participation.
Public notices will be organized by department, with the newest notices displayed first. Notices will remain available on the page for 120 days before being moved to an archive, the news release said.
Residents can view public notices on Mesa County’s website at www.mesacounty. us/resident-resources/public-notifications-county.
n New compactor approved for Mesa County Landfill
To help ensure reliable waste-disposal services and make the most efficient use of available landfill space, the Mesa County Commission approved a $1,177,980 purchase on June 16 for a new trash compactor at the Mesa County Landfill
The county said in a news release that the landfill receives more than 600 tons of waste each day and managed approximately 187,000 tons of waste in 2025. Because waste can only be placed within a state-permitted area, compacting it as densely as possible helps extend the life of the landfill and delays the need for costly future expansion.
Mesa County maintains two landfill compactors to ensure landfill operations can continue if one machine is undergoing maintenance or repairs. The new compactor will replace an existing unit as part of the landfill’s planned equipment replacement schedule. The purchase includes a five-year, 10,000-hour warranty.
n Roof replacement approved for County’s Powell Building
The Mesa County Commission approved a $144,544 contract on June 16 for a roof replacement at the Criminal Justice Services Department Powell Building. The existing roof has experienced significant leaks and reached the end of its useful life, making replacement necessary to protect the facility and help avoid more costly repairs in the future, the county said in a news release.
Installed in 2007, the roof serves the Criminal Justice Services Department facility at 650 South Ave. The project includes removing the existing roofing system and insulation and installing a new roof designed to improve durability, weather protection and energy performance.
According to the news release, Mesa County solicited bids for the project and selected Grand Junction-based CRW Inc. based on best value. Construction is expected to take four to six weeks.
BUSINESS BITES
• New hours for doughnut shop: Sweet Coloradough, 1410 North Ave., made several changes to the days it is open and ultimately added a fifth day. After being open Tuesday, Wednesday, Friday and Saturday, Sweet Coloradough is now open Wednesday through Sunday, 5:30 a.m. to 3 p.m. It also announced sandwiches are “coming soon” to its menu.
• Satisfied customers: Vortex Engineering & Architecture senior project architect Rich Carter, who was the architect for Tiki Bird Restaurant’s buildout and renovation, was ending a June 24 conversation with Tiki Bird owners Matt Chasseur and Ashley Fees Chasseur by telling them, “If you ever have any other architectural needs ...”
Before Carter could finish, Matt said, “You’re the guy; there’s no question,” and Ashley added, “No question. No question.”
• That’s a good landlord: Tiki Bird is leasing the building at 119 N. Seventh St., which is owned by the Wick family, who used to own Junct’n Square Pizza and operate it there until selling the business but keeping the building last year. Tiki Bird had to do a major renovation of the interior, but first came asbestos mitigation, and Matt Chasseur said the Wicks paid for that.
“That was part of it, for us coming in, is they had to take care of all of that, which they did, which was great,” Matt Chasseur said.
