Commercial Lease Types Explained:
What Every Arizona Landlord and Tenant Needs to Know

By Geoff Adams, CCIM  |  Realty One Group Commercial  |  Arizona

Commercial leases come in different structures based on how rent and expenses are divided between landlords and tenants. Understanding the differences before you sign — or before you list — can mean the difference between a deal that works and one that costs you for years. This guide covers every major commercial lease type used in Arizona, explains how they compare, and helps you identify which structure fits your situation.

Gross Lease (Full-Service Lease)

In a Gross Lease, the tenant pays a single fixed rent amount and the landlord covers most or all operating expenses, including property taxes, insurance, and maintenance. This structure offers maximum cost predictability for tenants and is common in multi-tenant office buildings across the Phoenix metro and Tucson markets.

Best for tenants who: Want a fixed, predictable monthly cost with no exposure to rising operating expenses.
Best for landlords who: Want to attract a wider pool of tenants and maintain full control over building operations.

Net Leases: Single, Double, and Triple Net Explained

A Net Lease requires tenants to pay a lower base rent plus a share of property operating expenses. The number of expenses passed to the tenant determines whether the lease is a Single, Double, or Triple Net structure.

NN vs NNN Lease: What Is the Difference?

The distinction between a Double Net and Triple Net lease comes down to one item: maintenance responsibility. In a NN lease the landlord retains responsibility for building maintenance and structural repairs. In a NNN lease that responsibility shifts to the tenant entirely. For landlords, NNN is the preferred structure because it minimizes ongoing management obligations. For tenants, a NN lease offers slightly more protection against unexpected repair costs.

Modified Gross Lease

A Modified Gross Lease blends elements of both Gross and Net leases. The tenant pays one negotiated amount that may include certain net expenses such as taxes and insurance, while utilities and janitorial costs are typically excluded. This structure is highly flexible and the specific terms vary deal by deal, making it critical to have an experienced commercial real estate professional review the lease before you sign.

Best for: Office and flex space tenants and landlords who want a negotiated middle ground between full landlord responsibility and full tenant responsibility.

NNN vs Gross Lease: Which Is Better?

The right answer depends on which side of the transaction you are on and what your priorities are.

Quick Reference: Arizona Commercial Lease Types at a Glance

Lease Type	Tenant Pays	Landlord Pays
Gross / Full Service	Fixed rent only	Taxes, insurance, maintenance, utilities
Single Net (N)	Rent + property taxes	Insurance, maintenance
Double Net (NN)	Rent + taxes + insurance	Maintenance and repairs
Triple Net (NNN)	Rent + taxes + insurance + maintenance	Structural repairs (varies)
Absolute NNN	All expenses including structure	Nothing
Modified Gross	Negotiated split	Negotiated split

Frequently Asked Questions

What is the most common commercial lease type in Arizona?

The Triple Net lease is the most common structure for retail, industrial, and single-tenant commercial properties across Arizona. It is the standard in markets like Phoenix, Scottsdale, Mesa, Chandler, Gilbert, and throughout the West Valley and Tucson.

What is the opposite of a Triple Net lease?

A Gross or Full Service lease is the opposite of a Triple Net lease. In a Gross lease the landlord absorbs all operating expenses. In a Triple Net lease those same expenses pass entirely to the tenant.

Which lease type is best for a tenant?

It depends on your priorities. A Gross lease offers the most budget certainty since your monthly payment is fixed. A NNN lease offers a lower base rent but variable total costs as taxes and insurance fluctuate. For most small business tenants a Modified Gross or Gross lease provides the most financial stability.

Which lease type is best for a landlord?

An Absolute NNN lease provides the most financial protection since all expenses pass to the tenant. For multi-tenant office or retail properties a Modified Gross or NNN lease is typically the most competitive and practical structure in the Arizona market.

Do I need a commercial real estate agent to negotiate a lease?

You are not required to use one, but the terms buried in a commercial lease, from expense caps and exclusivity clauses to renewal options and personal guarantees, can have significant financial consequences for years. Having a CCIM-designated professional review and negotiate your lease costs you nothing as a tenant in most cases, since the landlord typically covers the commission.