Leases
Modified Gross
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Also called: modified gross lease · modified net lease
"Modified gross" has no single standard definition — that's the point of the term. It describes any lease that splits operating expense responsibility between landlord and tenant differently than a pure gross or pure NNN structure, which means the specific allocation (who pays taxes, insurance, CAM, utilities, and in what proportion) has to be read from the lease itself rather than assumed from the label.
It's the most common structure in multi-tenant office and small-bay industrial/flex, where a landlord wants some expense pass-through without the full administrative burden of a triple net reconciliation on every tenant, and tenants want more cost predictability than a fully gross lease with an aggressive expense stop.
Because the term is imprecise, comparing two "modified gross" quotes on competing spaces requires reading the actual expense allocation in each — a materially different effective rent can hide behind the same label depending on what's included in base rent versus billed back.
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Terms that travel with this one
- Gross LeaseA lease structure where the landlord pays all or nearly all operating expenses — taxes, insurance, maintenance, and often utilities — out of the base rent, giving the tenant a single predictable payment.
- NNN (Triple Net)A lease where the tenant pays base rent plus its pro-rata share of the three major operating costs — property taxes, insurance, and common area maintenance — leaving the landlord with reduced expense exposure.
- CAMCommon Area Maintenance — the operating costs of shared property areas (parking lot, landscaping, lighting, snow removal) that a landlord passes through to tenants, usually pro-rata by square footage.
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