What are the three main commercial lease types: NNN, gross, and modified gross, and who bears operating expense risk in each?

Commercial lease structures fundamentally differ in how operating expenses are allocated. In a triple-net (NNN) lease, the tenant pays base rent plus their share of property taxes, building insurance, and common area maintenance (CAM), giving the landlord highly predictable income. In a gross (or full-service) lease, the tenant pays a single inclusive rent and the landlord absorbs all operating costs, which is common in multi-tenant office buildings. A modified gross lease falls in between, with the landlord and tenant negotiating which expenses each party covers. NNN leases are most common in single-tenant retail (think fast-food restaurants and pharmacies) and are particularly attractive to passive investors because the tenant handles most property management responsibilities.