The three structures
| Type | Tenant pays | Typical for |
|---|---|---|
| Triple-net (NNN) | Base rent + pro-rata taxes, insurance, CAM/maintenance (often utilities and janitorial too) | Retail, industrial, single-tenant buildings |
| Gross / full-service | One rent number; landlord pays operating costs (often with a base-year cap) | Multi-tenant office |
| Modified gross | Base rent + some agreed items (e.g., utilities, janitorial) — landlord keeps taxes/insurance | Small office, mixed-use, flex |
How rates are quoted (and why they're not comparable)
California commercial listings quote rent as $/sq ft per month, $/sq ft per year, or a gross monthly amount — and the number may or may not include the NNN charges. Ask for three things on every space: the base rate and its unit, the lease type, and the current-year NNN or operating-expense estimate per square foot. Then compute an all-in monthly number for your square footage. Only that number is comparable across listings.
Terms that decide the real cost
- CAM (common area maintenance) — parking lot, landscaping, lighting, security, management fee. Ask what's included, whether it's capped, and how it reconciles annually.
- Base year (gross leases) — the landlord covers expenses up to year-one levels; you pay increases above that. A high base year protects you.
- Escalations — fixed annual bumps (often around 3%) or CPI-linked. Model the whole term, not just year one.
- TI allowance — landlord-funded build-out, quoted per square foot; a longer term usually earns more TI.
- Free rent / abatement, options to renew, right of first refusal on adjacent space, assignment and subletting rights, and any personal guarantee — negotiate all of these; the base rate is not the only lever.
- Load factor — office rent is often charged on rentable square feet (your suite plus a share of lobbies/hallways), not usable. Ask for both numbers.
California-specific things to know
Commercial leases are governed by the lease, not by residential tenant-protection law — with one recent exception: since January 1, 2025 (SB 1103), qualified commercial tenants — microenterprises with five or fewer employees, restaurants with ten or fewer, and nonprofits with twenty or fewer, who give the landlord written notice of that status — get advance notice of rent increases on month-to-month tenancies, and landlords must allocate and document any building operating costs (CAM) they pass through and provide the backup on request. Separately, landlords must state in every commercial lease whether the property has been inspected by a Certified Access Specialist (CASp) and provide the report if one exists (Civil Code §1938), and larger buildings carry energy-benchmarking duties. Get a commercial-experienced attorney to review any lease longer than a year — the cost is small next to a five-year commitment.