Gross vs Net vs Triple-Net (NNN): How Commercial Lease Structures Really Work
Two spaces both quote “$20 a foot.” One is gross, one is triple-net. The difference can be another $15 a foot. Learn the structure before you talk price.
What is the difference between a gross, net, and triple-net commercial lease?
The difference is who pays the three operating costs — property taxes, insurance, and maintenance. In a gross lease, the tenant pays one flat rent and the landlord covers operating costs out of it. In a net lease, the tenant pays a base (net) rent plus a share of operating costs: single-net (N) adds taxes, double-net (NN) adds taxes + insurance, and triple-net (NNN) adds taxes + insurance + maintenance — pushing almost all costs onto the tenant. Most Ontario retail and industrial space is NNN.
Source: Ontario commercial leasing practice / OREA commercial clauses (2026)
I’m Arthur Zhao. The most common mistake I see when clients tour commercial space is comparing the “per-square-foot rent” of two listings head-to-head. One quotes $20, the other $32, and the instinct is that the first is cheaper. But the first may be net rent on an NNN deal and the second a fully-loaded gross figure — add the TMI and the “cheaper” space can actually cost more. The first lesson in commercial leasing isn’t price. It’s structure.
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Gross (full-service) lease
Net leases — layering costs back onto the tenant
Triple-net (NNN) — the Ontario retail/industrial default
⚠️Before signing an NNN lease, ask the landlord for a historical and budgeted TMI breakdown, and check whether it hides items that shouldn’t be there — management fees, leasing commissions, or the landlord’s mortgage interest. Opaque TMI is the single most common commercial-tenant trap.
💡 An illustration (example only): an industrial unit lists at “net rent $16/sf, TMI $8/sf.” Your all-in occupancy cost is 16 + 8 = $24/sf, plus 13% HST. Comparing the $16 to a $22 gross deal elsewhere would lead you to exactly the wrong conclusion. Always ask: is this net or gross, and what is the TMI?
Why structure matters more than the headline rate
Structure decides who carries future uncertainty. Under a gross lease, rising taxes, insurance premiums, and roof repairs are the landlord’s problem. Under NNN, they’re yours — and many are outside your control. So in an NNN deal the smart tenant fights less over a dollar or two of net rent and more over: capping controllable operating costs in TMI, excluding capital repairs (roof, structure, HVAC replacement) from TMI, and securing audit rights. Those clauses usually save far more than shaving the base rent.
Frequently Asked Questions
In an NNN lease, is the quoted net rent what I pay each month?
No. Net rent is only the base. On top of it you pay TMI (taxes + insurance + maintenance) and 13% HST. Your actual monthly cost = net rent + TMI + HST. Always add all three before signing.
Which is better for a tenant — gross or triple-net?
There’s no universal answer. Gross is predictable and low-hassle, but the landlord prices risk into the rent. NNN looks cheaper on the net figure, but you carry the risk of rising taxes, insurance, and maintenance. Cash-flow-sensitive businesses that want certainty often prefer gross; tenants who can negotiate a TMI cap can do very well on NNN.
Are TMI and CAM the same thing?
In Ontario, TMI means Taxes, Maintenance, and Insurance — the additional-rent bucket. CAM (Common Area Maintenance) is the maintenance portion, a term common in US-style or mall leases. In practice they overlap; what matters is knowing exactly which items the additional rent includes.
Does net rent increase during the term?
Usually. Most commercial leases have stepped net-rent increases — a bump every year or every few years — while TMI moves with actual operating costs. When negotiating, model the full net-rent escalation schedule and the TMI trend across the whole term.
What should I confirm before signing a commercial lease?
Four things: (1) net vs gross structure; (2) exactly what TMI/CAM includes, its history, and whether it can be capped; (3) the net-rent escalation schedule; and (4) whether your intended use is permitted by the property’s zoning. Price comes after structure and use, not before.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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