The following glossary of terms are commonly addressed in an office lease:

Full Service Rent - This rental rate structure includes all operating expenses and taxes in the first year. Operating expenses and taxes in excess of the first year are passed through to the tenant.

NNN Rent - This rental rate structure separates the base rent from the operating expenses. These expenses include taxes, insurance, and common area maintenance. The operating expenses are billed separately.

Base Year - The year upon which expense escalations are calculated.

Expense Stop - Stipulates the maximum amount of expenses that the landlord will pay. Expenses above the expense stop are reimbursed by the tenant (expense overage).

Core Factor - Also referred to as a common area factor, load factor, or loss factor. The percentage of the common areas in a building are added to the usable square footage to determine the rentable square footage.

Acceleration Option - Also referred to as a termination option. This option allows the tenant to end its lease by accelerating the expiration.

Tenant Improvements - Improvements to the space that meet the needs of the tenant. These improvements may be paid for by the landlord, tenant, or both.

1. Am I paying less with a NNN lease than I would be paying with a full service lease?
Not necessarily. When a lease is quoted “NNN” the rate will be much less that a comparable building that is quoted “full service”. The difference with a “NNN” lease is that that you need to expect to be billed for the taxes, insurance, common area maintenance, and electricity. When added together, this figure will usually be close to a comparable full service rate.

2. I have an office lease with a full service rental rate. Why does my bill increase each year?
Considering there are no annual rental increases, you are probably being charged for expense overages. When expenses rise above and beyond your negotiated “base year” you will be billed your pro-rata share of the difference.

3. I want to exit my lease early. What are my options?
One can do a couple of things depending on how the lease was negotiated. A tenant can almost always choose to sublease the space. This can be difficult depending on market conditions. If included in the lease, a tenant may choose to exercise a termination or acceleration option. These options are all negotiated items and each can be different in its scope.