What “full service” includes
In a typical full-service gross office lease the rent covers: property taxes and building insurance; common-area maintenance and management; electricity, water, and HVAC during standard building hours (often something like 8 a.m. to 6 p.m. weekdays and a half day Saturday); nightly or several-times-a-week janitorial for the suite and common areas; and routine repairs to building systems. The tenant writes one check. This is why FSG rents look high next to NNN rents for comparable space — a $3.50 full-service rate may be the equivalent of $2.60 NNN plus $0.90 in operating expenses.
What is usually not included
- After-hours HVAC — billed hourly per zone; matters for firms that work evenings and weekends.
- Excess utility use — server rooms, labs, and heavy equipment are often sub-metered and billed separately.
- Parking — usually a separate monthly charge per space in California cities.
- The tenant's own insurance, phone, internet, security systems, and any above-standard cleaning.
- Increases over the base year — see below; this is the part of a “gross” lease that behaves like a net lease.
Base year and expense stop, explained
A base year clause sets the operating expenses of the first lease year (or the calendar year the lease starts) as the landlord's ceiling. In later years the tenant pays its pro-rata share of any expenses above that level. An expense stop works the same way but uses a fixed dollar figure per square foot instead of an actual year's costs.
Example: a 3,000-rentable-square-foot suite at $3.25 full-service ($9,750 a month) in a building where base-year operating expenses are $12.00 per square foot per year. In year three, expenses reach $13.20 per square foot. The tenant owes the $1.20 increase × 3,000 square feet = $3,600 for the year, or $300 a month on top of rent — before the lease's own annual rent escalation. By year five, with expenses at $14.00, the pass-through is $500 a month. Over a five-year term the base-year clause can add several percent to the effective rent, which is why the base year itself is a negotiating point.
The gross-up clause and why it protects you
Variable expenses (janitorial, utilities, some maintenance) scale with occupancy. If the base year is set while the building is half-empty, those expenses are artificially low, and every later year's pass-through is inflated. A gross-up clause recalculates variable expenses in the base year and in each comparison year as if the building were stabilized (commonly 95% occupied), so the tenant pays only genuine cost increases. Ask for it.
Rentable vs. usable square feet
Office rent, including full-service rent, is charged on rentable square feet: your suite plus a share of lobbies, corridors, and restrooms. The ratio is the load factor, commonly 10–20% in multi-tenant buildings. A 2,500-usable-square-foot suite with a 15% load factor rents as 2,875 square feet. Always ask for both numbers and compare buildings on cost per usable foot.
Full-service gross vs. modified gross vs. NNN
| Full-service gross | Modified gross | Triple-net (NNN) | |
|---|---|---|---|
| Rent covers | Taxes, insurance, CAM, janitorial, business-hours utilities | Taxes, insurance, CAM (usually); tenant pays own utilities/janitorial | Base rent only; tenant pays share of taxes, insurance, CAM plus own utilities |
| Cost increases | Tenant pays increases over base year / expense stop | Varies; often increases over base year | Tenant pays actual costs, reconciled annually |
| Base rent level | Highest | Middle | Lowest |
| Typical for | Multi-tenant office | Small office, flex, mixed-use | Retail, industrial, single-tenant |
For the others in depth: modified gross leases and NNN vs. gross leases.
What to negotiate in a full-service lease
- The base year — a later base year (the first full calendar year after move-in) or a higher expense stop lowers future pass-throughs.
- Gross-up to 95% occupancy in the base year and comparison years.
- Caps on controllable expenses and exclusions for capital improvements, leasing commissions, and landlord overhead.
- Audit rights with a reasonable window, and a deadline for the annual reconciliation statement.
- Building hours and after-hours HVAC rates written into the lease, not left to building rules that can change.
- Escalations (fixed 3% or CPI-linked), free-rent months, TI allowance, renewal options, and any personal guarantee.
California notes
Commercial leases are governed by the lease, not residential tenant-protection law. Since January 1, 2025 (SB 1103), qualified commercial tenants — microenterprises with five or fewer employees, restaurants with fewer than ten, nonprofits with fewer than twenty, who give written notice of that status — must receive proportionate, documented operating-cost pass-throughs and can request the supporting records, which applies to base-year reconciliations. Every commercial lease must also disclose whether the premises have been inspected by a Certified Access Specialist (CASp) and provide the report if one exists (Civil Code §1938). For a multi-year office lease, have a commercial-experienced attorney review the operating-expense article.