What Clients Ask Us About Triple Net vs Gross Leases in Franklin

How is a gross lease different?

A gross lease is one where the tenant pays a single, all-in rent figure and the landlord covers property taxes, insurance, and most building expenses out of that amount. Your monthly number stays the same regardless of whether the property tax bill rises or the roof needs work.

Most gross leases in Franklin are actually "modified gross," meaning a few costs get split. A common arrangement: the landlord covers taxes, insurance, and structural maintenance, while the tenant pays their own utilities and janitorial. Office space in multi-tenant buildings frequently uses this structure.

The trade-off is simplicity for the tenant and a higher built-in base rent for the landlord, who is pricing in expected expenses plus a cushion for the unknowns.

Which lease costs more?

Neither structure is automatically cheaper — it depends on how the property's actual expenses shake out over the term. A NNN lease can look like a bargain on the base rent line and end up costing more once net charges climb. A gross lease can feel expensive upfront but protect you from surprise increases.

Here's how the two compare on the points clients ask about most:

| Factor | Triple Net (NNN) | Gross / Modified Gross | |---|---|---| | Base rent | Lower | Higher | | Who pays taxes & insurance | Tenant | Landlord | | Maintenance responsibility | Tenant (often including CAM) | Landlord (structural) | | Monthly predictability | Variable | Stable | | Common property types | Retail, freestanding, industrial | Multi-tenant office | | Budgeting effort | Higher | Lower |

The honest answer we give clients is that you can't compare two spaces on base rent alone. You have to load the net charges onto the NNN option before you put the numbers side by side.

What questions should I ask before signing a NNN lease?

Ask exactly what's included in the net charges and how they're calculated. CAM is where surprises hide, and the language varies from building to building. A few questions worth raising before you commit:

• What's the historical CAM figure? Ask for two or three years of actuals, not just the projected number.
• Is there a cap on annual CAM increases? A cap protects you from a single bad year of expenses.
• Are capital improvements passed through? A new parking lot or HVAC system can show up in your charges unless the lease excludes major capital items.
• How is my pro-rata share calculated? In a multi-tenant property, your share should reflect your square footage relative to the leasable building area.
• Is there a reconciliation process? Many NNN leases estimate charges monthly, then "true up" once a year. You want to understand whether you might owe a lump sum or receive a credit.

Reading the operating-expense clause closely matters as much as the rent. The U.S. Small Business Administration's guidance on leasing commercial space is a useful starting point for understanding how lease obligations affect a business budget.

How do Franklin's property taxes factor in?

Williamson County reassesses property values on a cycle, and when assessments rise, NNN tenants feel it directly through the tax pass-through. Gross-lease tenants don't see that line item — the landlord absorbs it, though it may influence rent at renewal.

This is one reason out-of-area tenants are sometimes caught off guard. A NNN lease signed in a year of stable assessments can carry meaningfully higher net charges after a reassessment. If you're leasing in a fast-appreciating corridor heading into Summer 2026, ask your agent how recent assessment trends have affected net charges in comparable buildings.

Which structure is better for my situation?

Choose based on how much budget certainty you need versus how much control you want. A NNN lease tends to suit tenants who want a lower entry rent and are comfortable managing variable costs — established businesses, franchises, and operators who track expenses closely. A gross lease tends to suit tenants who value a fixed monthly number and don't want to manage building expenses — smaller offices, newer businesses, and anyone budgeting tightly.

For landlords and investors, the calculus flips. NNN structures shift expense risk to the tenant and produce cleaner net income, which is why they're popular with investors buying commercial property in Franklin and surrounding Williamson County.

At Redbird Real Estate, our work focuses on Franklin commercial leasing on both sides of the table — landlord and tenant representation — so we read these clauses the way the other party will. The goal is making sure the number you sign for is the number you actually live with.

The smartest move before signing either type is to model your full occupancy cost over the entire term, not just year one. A space that looks affordable on the quoted rent can shift once net charges, escalations, and reconciliation are layered in — and that full picture is what should drive your decision.