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Originally published: December 2025
If you’re searching for office space in Alabama, you’ll spot landlords quoting rent with all sorts of lease structures. The big three? NNN (triple net), Modified Gross, and Full-Service leases.
Each one shifts who pays for property taxes, insurance, maintenance, and utilities. That’s where it gets interesting.
NNN (Triple Net) office lease: You pay base rent plus your share of property taxes, building insurance, and CAM/maintenance. Utilities and janitorial are typically your responsibility, and your total cost varies with operating expenses.
Modified gross office lease: You pay base rent plus some operating expenses, while the landlord covers others. What’s included varies by building, so the lease must spell out included costs, annual increases, and reconciliation rules.
Full-service (gross) office lease: Most building operating expenses are bundled into the rent for simpler budgeting. Many “full-service” leases still include base-year/expense-stop language that passes future increases to tenants.
Which lease actually costs less? It’s not as simple as just looking at base rent. NNN leases typically offer the lowest base rent for office buildings and other commercial properties in Alabama.
But you’ll pay separately for property taxes, insurance, and maintenance costs. Full-service leases advertise the highest rent per square foot, but that rate includes almost all operating expenses.
You get predictable monthly costs—no surprise bills for repairs or property management. Modified gross leases? They’re in the middle. Your base rent covers some things, but you’ll pay out-of-pocket for others, like utilities or janitorial.
Here’s what affects your actual costs:
If you want a true cost comparison, you need to figure out the total occupancy cost. Add your base rent and all operating expenses you’ll pay during the lease.
A triple-net office lease can look cheaper at first, but after taxes, insurance, CAM, and other pass-throughs, it may cost more than a full-service office lease. That’s why office tenants should compare all-in occupancy costs, not just base rent.
The cheapest option? It depends on what your business needs and how much risk you’re willing to take on variable costs in Alabama’s commercial real estate market.
When comparing office leases in Alabama, it comes down to who covers which operating expenses. If you know who pays for property taxes, insurance, and CAM, you can actually calculate your real occupancy costs.
Triple Net (NNN) Lease:
Modified Gross Lease:
Full-Service Lease:
CAM (Common Area Maintenance) typically covers day-to-day operating costs for shared areas, including cleaning, lighting, landscaping, and routine repairs. Major replacements (such as a new roof or HVAC system) are capital items and should be treated differently under the lease.
Here’s the real distinction: risk. With NNN leases, you’re on the hook if property taxes or maintenance costs go up. In a full-service lease, the landlord absorbs those increases (though sometimes they’ll pass along expense increases after the base year).
Always comb through your lease agreement. The written contract specifies exactly which expenses you’ll cover, regardless of what the landlord says verbally.
| Cost item | Full-Service (Gross) | Modified Gross | NNN |
| Property taxes | Often included (verify base year/stop) | Negotiated | Tenant pays (pass-through) |
| Building insurance | Often included (verify base year/stop) | Negotiated | Tenant pays (pass-through) |
| CAM/maintenance | Often included (verify base year/stop) | Negotiated | Tenant pays (pass-through) |
| Property management fees | Often included | Negotiated | Often pass-through (confirm %) |
| Suite utilities | Sometimes excluded | Often tenant | Usually tenant |
Dean Commercial Real Estate can break down NNN, modified gross, and full-service quotes into a single all-inclusive number for your Alabama office lease. Schedule a consultation.
If you’re ready to get started, call us now!
A full-service lease looks like the easiest way to budget—one payment covers rent and most operating costs. But you need to double-check what “full service” actually means and whether there’s an expense stop that limits your landlord’s obligations.
The written agreement should spell out which utilities and services are included and what happens if costs increase after the base year.
Your full-service gross lease must clearly state the base year for operating expenses. That’s the year the landlord uses as the benchmark for costs such as property taxes, insurance, utilities, and maintenance.
When costs rise in later years, you might pay your share of the increase—an expense stop cap limits what the landlord will pay for these expenses. You cover anything above that.
Get these items in writing before you sign:
The difference between truly full-service gross leases and those with expense stops can shift your budget by thousands.
Make sure your landlord’s responsibilities are clearly listed so you know what you’re getting for your monthly payment.
A modified gross lease is a hybrid that combines elements of both gross and net leases. You’ll see this type a lot in Alabama office buildings, but it’s easy to trip up on.
The catch? No two modified gross leases are identical. Landlords can structure expense sharing in many ways.
You might pay base rent plus your share of utilities and janitorial, while the landlord covers taxes and insurance. Or the split could be totally different.
Here’s what makes this lease type tricky:
Expense sharing is the one thing you really need to nail down. Some Alabama landlords include most operating costs in the base rent and only pass through a few extras. Others flip it—low base rent, but you’re responsible for more costs.
Before you sign anything, ask your landlord:
Modified gross leases offer both sides some flexibility. But that flexibility leaves plenty of room for confusion.
You’ve got to compare total costs across properties—not just the advertised rent. Sometimes, a lower base rent will actually cost you more once you add up all the extras over the year.
A triple net lease might show a tempting base rent of $15 per square foot, but your true occupancy costs could jump to $23–$28 after adding operating expenses, property taxes, and insurance.
The real financial risk in NNN leases arises during annual reconciliations, when landlords bill you for actual expenses rather than the estimated costs.
Your NNN lease agreement deserves a close look, especially at what’s considered Common Area Maintenance (CAM). Some landlords attempt to bill CAM for items such as major renovations, leasing commissions, or large replacements. Your lease should clearly define CAM, limit admin/management markups, and separate operating costs from capital projects.
Management fees can hide in plain sight. A landlord might tack on 15% of total operating expenses as a management fee, meaning you pay a percentage on top of every expense they rack up.
Capital expenses versus operating expenses matter—a lot. A new HVAC system is a capital expense and should be amortized over its useful life, not billed in a single lump sum.
Make sure your triple-net lease clearly specifies which items are excluded from pass-through costs.
Audit rights allow you to review charges. Without this clause in your net lease, you’re stuck with whatever numbers the landlord hands over.
Alabama tenants should push for annual audit rights with a 12–24 month lookback period.
Negotiate audit rights, a reasonable lookback window, and who pays audit costs if a material discrepancy is found. That keeps reconciliations honest and gives you a path to challenge questionable CAM or management fees.
When you look at office spaces in Alabama, don’t just compare base rents. Two offices with the same monthly rent can end up costing very different amounts after you add everything up.
The smarter move? Calculate your Effective Occupancy Cost. Add up all your financial obligations for the space, then divide by the square footage.
This gives you a real cost per square foot that includes everything.
Here’s what you should factor into your calculation:
Take a Modified Gross lease at $18 per square foot base rent and a Full-Service lease at $22. The Modified Gross appears cheaper at first glance.
But after you add utilities, janitorial, and other variable costs, the real number might be $24 per square foot.
Full-service leases provide better cost predictability because most expenses are bundled. NNN leases, on the other hand, have the most variable costs, which makes budgeting a headache. Modified Gross lands somewhere in between.
Ready to compare offers without surprises? Let your team tour and model costs with Dean Commercial Real Estate, then negotiate caps and concessions—Contact us.
If you’re ready to get started, call us now!
No matter if you’re signing an NNN, modified gross, or full-service lease, always negotiate specific terms. The base rent is negotiable, and you can often secure a better deal by committing to a longer lease.
What to negotiate in every office lease
Negotiate caps on operating expense increases in your lease agreement. Understanding the negotiation process can help you land better terms from the start.
Request clear definitions of which expenses are included in your rent and which are excluded. Ambiguous language leads to nasty surprises in every lease structure.
Request audit rights so you can review the landlord’s expense calculations each year. This way, you won’t accidentally overpay for CAM or other shared costs.
The lease agreement should clearly specify who is responsible for repairs and maintenance. You don’t want to get stuck with structural issues or major building systems that should be the landlord’s problem.
Try to negotiate for a free rent period at the start. It gives you breathing room to move in and set up before the bills start rolling in.
There’s no one-size-fits-all lease for every business. The right choice really depends on your specific needs and financial situation.
If you want stable, predictable costs, a full-service lease is the way to go. You pay a single amount, and the landlord handles the rest.
A modified gross lease provides moderate predictability and some shared costs. If you’re comfortable with variable expenses, a triple net lease might suit your budget better. You get a lower base rent, but you pay property taxes, insurance, and maintenance separately.
Full-service leases carry the least risk for tenants. The landlord absorbs any cost increases in building expenses, shielding you from surprise repairs or tax hikes.
Triple-net leases shift most of the risk to you. If property taxes increase or the roof needs repair, that’s your bill. Modified gross leases split the risk more evenly between you and the landlord.
Newer businesses tend to prefer full-service leases because costs remain predictable. That way, you can focus on growing instead of tracking building expenses.
Established companies with steady cash flow might opt for triple-net leases. The lower base rent frees up cash for other investments, and you get more control over maintenance and operations.
Small office tenants usually find full-service or modified gross leases in multi-tenant buildings. Larger tenants who take over entire buildings often negotiate triple-net terms.
You need to see the real numbers before you sign any office lease in Alabama. Ask the landlord for an operating expense statement covering the past 2 or 3 years. That shows what tenants actually paid beyond base rent.
Request a copy of the building’s operating budget for the current year. You’ll see projected costs for maintenance, insurance, property taxes, and utilities. Compare those numbers to previous years and see if anything looks off.
Essential documents to request (office leases):
Request the lease abstract or summary that explains how expenses are calculated and allocated among tenants. That tells you exactly what formula the landlord uses to bill you.
Get copies of any tenant improvement allowance agreements in writing. Verbal promises don’t cut it—put it all in writing.
Request the building rules and regulations document. This covers everything from signage and parking to after-hours HVAC costs.
Before you try to make sense of different lease structures, get your hands on these documents. They let you compare properties side by side. Without them, you’re just guessing—and that’s never a good way to make big decisions.
Older buildings can have higher variability in repair and operating expenses, while multi-tenant office properties often use modified gross or full-service structures with specific exclusions. Always validate what’s “included” with real historicals and written lease terms.
Trying to choose between NNN, modified gross, and full-service leases in Alabama’s commercial real estate market?
Dean Commercial Real Estate steps in as your tenant advisor to help you find the right space, and they’ll negotiate terms that really work for you.
A real estate pro knows how each lease structure hits your monthly costs and long-term budget. They’ll break down all those complicated lease terms into comparisons you can actually use for your business.
Key Ways Tenant Representation Helps:
Dean Commercial Real Estate offers tenant advisory services to help you save time and money during the leasing process. Your representative evaluates properties based on your needs and budget—no cookie-cutter approach here.
When you’re negotiating a commercial lease in Alabama, having someone in your corner makes a difference. Your advisor can negotiate better rates and terms and knows the market well enough to spot a good deal (or a bad one).
The firm handles full-service leasing and brokerage, so you don’t have to sweat the details. From the first property search to the last round of negotiations, they’ve got it covered for business owners who’d rather focus on their work.
With a tenant advisor supporting your lease review and comparisons, you gain clearer pricing visibility and stronger negotiating leverage.
The right process ensures cost transparency and prevents key terms from being buried until it’s too late.
Get clearer lease terms, tighter CAM language, and budgeting confidence before you sign. Schedule an appointment for office leasing support with Dean Commercial Real Estate.
What does NNN mean in an Alabama office lease?
In an Alabama office NNN (triple net) lease, you pay base rent plus your share of property taxes, building insurance, and CAM/maintenance. Utilities and janitorial are usually separate, so your monthly cost can vary year to year.
What is a full-service (gross) office lease?
A full-service (gross) office lease typically bundles most operating expenses into the rent, so you pay one primary monthly amount. Confirm what’s excluded and whether a base-year/expense-stop clause shifts future increases back to tenants.
What is a modified gross office lease, and why is it tricky?
A modified gross office lease is a negotiated split: some costs are included in base rent while others are billed separately. It’s tricky because there’s no standard formula—your lease must list included items, increases, and reconciliations.
Who pays CAM, utilities, and janitorial in each lease type?
NNN tenants usually pay CAM, utilities, and janitorial separately. Full-service often includes CAM and janitorial, and may include some utilities, but exclusions are common. Modified gross varies—treat every offer as custom and verify in writing.
What is a base year or expense stop in a full-service lease?
A base year or expense stop sets the landlord’s operating-cost benchmark. If taxes, insurance, or CAM rise above that level later, the tenant pays some or all of the increase. Ask how increases are calculated and billed.
How do I compare NNN vs gross rent quotes fairly?
Convert each option to effective occupancy cost: base rent plus estimated pass-throughs (taxes, insurance/CAM), plus suite costs (utilities, janitorial), minus concessions (free rent or TI). Compare the final monthly total on the same square-foot basis.
What documents should I request before signing an Alabama office lease?
Request the draft lease, prior operating-expense statements, CAM reconciliations, the current CAM budget, and the allocation methodology. Also ask for building rules, after-hours HVAC rates, and insurance requirements. These items reveal the true all-in cost.
