The lease type on your office space determines far more than your monthly check. It defines which operating expenses you pay, how predictable your costs are year to year, and how easy it is to compare one building against another. Understanding the three main lease structures used in the Omaha market -- triple net (NNN), full-service, and modified gross -- is essential before signing any commercial lease.
Two buildings quoted at very different headline rents can end up costing the tenant the same amount once lease structure is factored in. The difference is who pays the operating expenses and how they are allocated. This guide breaks down each type so you can compare office space pricing accurately.
Triple Net (NNN) Leases
In a triple net lease, the tenant pays base rent plus three categories of operating expenses separately: property taxes, building insurance, and common area maintenance (CAM). This is the most common structure for Class A office space in Omaha, particularly in suburban corridors like West Omaha.
The advantage of NNN is transparency. You see exactly what the building costs to operate, and you benefit if the landlord keeps expenses low. The downside is cost variability -- property taxes can increase after reassessment, insurance rates fluctuate, and CAM costs may rise with aging building systems.
NNN Cost Structure
| Expense Category | What It Covers | Primary Driver |
|---|---|---|
| Base Rent | The tenant's occupancy right to the space | Building class, submarket, lease term |
| Property Taxes | Real estate taxes assessed by the county | Assessed value and levy rate |
| Insurance | Building liability and property coverage | Building age, size, claims history |
| CAM | Maintenance, landscaping, snow removal, management fees | Age of systems, management scope |
When evaluating a NNN lease, always ask for the building's current operating-expense statement and at least three years of expense history. This reveals how costs have trended and whether the landlord manages expenses efficiently — the single most useful diligence item on any NNN deal.
Full-Service (Gross) Leases
A full-service lease bundles base rent and all standard operating expenses into a single quoted rate. The landlord pays property taxes, insurance, and CAM from the gross rent collected. This structure is more common in downtown Omaha office buildings, particularly multi-tenant towers where simplifying expense allocation makes sense.
The primary advantage is budget predictability. You pay one number each month and the landlord absorbs operating expense fluctuations. This simplicity is especially valuable for smaller tenants or businesses new to commercial leasing.
The trade-off is less transparency. You do not see how the landlord allocates your rent to expenses, and you may be paying a premium for the convenience. Full-service leases may also include "expense stop" or "base year" provisions that shift costs back to you after the first year if operating expenses increase.
Watch for base year clauses: Many full-service leases set a "base year" of operating expenses (usually your first lease year). If expenses increase above that baseline in future years, you pay the difference. This means a full-service lease can start to feel like a NNN lease over time. Ask what the base year expenses are and how they have increased historically.
Modified Gross Leases
A modified gross lease is a hybrid between NNN and full-service. The landlord includes some operating expenses in the base rent and passes others through to the tenant. There is no standard formula -- each modified gross lease defines its own split of expenses, which makes it critical to read the lease terms carefully.
Common arrangements in the Omaha market include the landlord covering insurance and property taxes while the tenant pays CAM and utilities, or the landlord covering all expenses except janitorial and utility costs for the tenant's suite.
Modified gross leases are common in Class B and Class C buildings where landlords want to offer a simpler alternative to NNN without absorbing all expenses. They offer a middle ground: more predictable than NNN, more transparent than full-service.
Lease Type Comparison
This side-by-side comparison summarizes the key differences between the three lease structures you will encounter in the Omaha office market:
| Lease Type | Base Rent | Additional Costs | Best For | Common In |
|---|---|---|---|---|
| Triple Net (NNN) | Lowest quoted rate | Taxes + Insurance + CAM paid separately | Tenants who want transparency | Class A suburban |
| Full-Service | Highest quoted rate | Included (with possible base year escalations) | Tenants who want simplicity | Downtown multi-tenant |
| Modified Gross | Mid-range quoted rate | Some expenses included, some passed through | Tenants who want a hybrid | Class B and C buildings |
How to Evaluate a Lease Offer
Regardless of lease type, there are several steps that protect your interests when evaluating commercial office space:
- 1. Request operating expense history: Ask for at least three years of actual expense data. This reveals trends and helps you forecast future costs. A well-managed building will show stable or slowly rising expenses.
- 2. Understand base year vs. expense stop: In a full-service lease, the "base year" sets the baseline for expense pass-throughs. An "expense stop" caps the landlord's contribution at a fixed dollar amount. Both mechanisms shift rising costs to you -- know which one applies.
- 3. Negotiate CAM caps: On NNN and modified gross leases, negotiate a cap on annual CAM increases. This protects you from unexpected spikes in maintenance or management costs. The negotiated cap is typically a fixed percentage per year, with exact levels varying by building and tenant leverage.
- 4. Compare total occupancy cost: Convert every lease offer to a total annual cost per square foot before comparing. Add base rent, estimated NNN expenses, parking, and any other charges to get a true apples-to-apples number.
- 5. Review the escalation clause: Most commercial leases include annual rent increases — commonly a fixed percentage or tied to CPI. Over a multi-year term, even modest escalations compound meaningfully. Factor your specific escalation formula into your long-term budget and stress-test it.
Frequently asked questions.
- Q01
- What does NNN mean in commercial real estate?NNN stands for triple net, meaning the tenant pays three categories of expenses on top of base rent: property taxes (the first N), building insurance (the second N), and common area maintenance or CAM (the third N). The dollar-per-square-foot add-on varies meaningfully by building, age, and year — always request the landlord's current operating-expense statement and three-year history before modeling total occupancy cost.
- Q02
- What is the difference between NNN and full-service?In a NNN lease, the tenant pays base rent plus property taxes, insurance, and CAM separately. In a full-service (gross) lease, the landlord bundles those expenses into a single quoted rate. The full-service rate appears higher, but total cost may be similar. The key advantage of full-service is budget predictability. NNN leases can fluctuate as operating expenses change annually, but offer transparency into building economics.
- Q03
- Which lease type is most common in Omaha?Triple net (NNN) leases are the most common structure for Class A and newer Class B office space in Omaha, particularly in the western suburbs. Full-service leases are more common in downtown buildings with multi-tenant floors. Modified gross leases appear throughout the market, especially in Class B and C buildings where landlords absorb some but not all operating expenses.
- Q04
- How do I calculate total occupancy cost?Start with your base rent per square foot, then add NNN pass-throughs (property taxes, insurance, and CAM — ask the landlord for current amounts and three-year history). Add parking costs if charged separately. Factor in any annual escalation clauses (market-standard is a modest fixed percentage or CPI-linked increase). Divide any one-time costs like build-out above your TI allowance across the lease term. The result is your true annual cost per square foot — the only number that lets you compare buildings apples to apples.
- Q05
- Can I negotiate which expenses I pay in a lease?Yes. Lease structures are negotiable, especially in a market like Omaha with healthy vacancy. You can negotiate CAM caps (limiting annual increases to a fixed percentage), expense stops (a dollar amount above which you pay), base year provisions (you only pay increases above the first year's expenses), or a full conversion from NNN to modified gross. Larger tenants and longer lease terms give you more negotiating leverage.