Navigating commercial real estate leases in North Carolina’s Triad region—Greensboro, Winston-Salem, High Point—can feel like decoding a secret handshake. Whether you’re a landlord eyeing steady cash flow or a tenant hunting for predictability, the lease type you pick shapes your wallet and your peace of mind. Here’s a rundown of the big four—Full Service Gross, Triple Net, Modified Gross, and Percentage Lease—with the good, the bad, and the view from both sides of the table. Let’s break it down.
1. Full Service Gross (FSG) Lease
What It Is: Landlord covers all operating costs—property taxes, insurance, utilities, maintenance—in one rent payment. Think all-inclusive resort vibes, but for your Triad office or retail space.
Landlord Perspective
- Pros:
- Predictable income—set rent, no haggling over bills.
- Control over property upkeep—e.g., you fix Greensboro’s leaky roofs yourself.
- Cons:
- You’re on the hook for rising costs—NC’s 5% utility hike in 2024 stings.
- Tenants might crank the AC in Winston-Salem summers—your dime.
Tenant Perspective
- Pros:
- One flat payment—budgeting’s a breeze for High Point startups.
- No surprise expenses—landlord eats the maintenance tab.
- Cons:
- Higher base rent—Greensboro FSG spaces run 10-15% pricier.
- Less control—can’t tweak utilities to save cash.
2. Triple Net (NNN) Lease
What It Is: Tenant pays base rent plus the “triple” extras—property taxes, insurance, maintenance (Net, Net, Net). Landlord’s hands-off, tenant’s hands-on.
Landlord Perspective
- Pros:
- Low risk—tenants cover rising taxes and insurence cost.
- Steady rent with less work—perfect for Industrial warehouses or Flex-space
- Cons:
- Tenant defaults hurt—missed taxes hit your books.
- Less control—tenants might skimp on your buildings upkeep.
Tenant Perspective
- Pros:
- Lower base rent— Triad NNN spaces generally have a lower monthly cost
- Full control—fix what you want, when you want.
- Cons:
- Variable costs—NC snowstorms mean you’re shoveling cash too.
- Responsibility overload— Bug problem – Your problem.
- HVAC quits – you could be on the hook to buy a brand new one for the Landlord.
TICAM stands for Taxes, Insurance and Common Area Maintenance. This is very important to understand as it affects the Total Rent cost as well as who is responsible for what.
3. Modified Gross (MG) Lease
What It Is: A middle ground—landlord and tenant split costs. Base rent includes some expenses (e.g., taxes), but others (e.g., utilities) are on the tenant.
Landlord Perspective
- Pros:
- Shared burden—NC insurance hikes split with tenants.
- Flexible terms—tweak for office tenants.
- Cons:
- Negotiation hassle—deals can drag over “who pays what.”
- Partial risk—some costs still creep up.
Tenant Perspective
- Pros:
- Balanced costs—MG leases cap surprises vs. NNN.
- Some control—pick your Triad janitor, not the landlord’s.
- Cons:
- Higher rent than NNN—MG spaces add to the total rent cost.
- Split duties—figuring out utilities, maintenance contracts takes homework
4. Percentage Lease
What It Is: Base rent plus a percentage of tenant’s gross sales—common in retail where landlord bets on your success.
Landlord Perspective
- Pros:
- Upside potential—eg. Friendly shopping center sales boom, you cash in.
- Ties to tenant success—Greensboro retail thrives, you win.
- Cons:
- Income swings— slow seasons shrink your cut.
- Tracking sales—audit tenants or risk getting shorted.
Tenant Perspective
- Pros:
- Lower base rent for a prime established retail center
- Fairness—pay more only if you make more.
- Cons:
- Profit share—holiday sales mean bigger landlord checks.
- Sales pressure—seasonal flops hit harder.
- Higher charges to customers could lower volume
Which Lease Wins in the Triad?
- Landlords:
- Love NNN for hands-off cash flow—Greensboro’s industrial boom loves it.
- Lean FSG for control— offices stay landlord-run.
- Tenants:
- Pick FSG for simplicity
- Go NNN for savings—Greensboro businesses receive lower base rent + TICAM
No one-size-fits-all here—your Triad CRE play depends on cash, control, and how much you trust the other side. Got a lease puzzle? Find a great Greensboro commercial broker who can provide you expert advice.
