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Alaska Commercial Lease Guide: NNN, Modified Gross & Full‑Service Explained

Understanding how NNN, modified gross, and full‑service commercial leases work is critical to choosing the right space for your business. This guide explains who pays which expenses, how each lease type affects your total occupancy cost, and what to watch for when you lease commercial property in Anchorage, Wasilla, and the Mat‑Su Valley.

What Is a Commercial Lease?

A commercial lease is a contract that outlines how a business can use a property and how rent and operating expenses are shared between the landlord and tenant. It sets expectations for base rent, operating costs, maintenance responsibilities, and the length of your tenancy.​

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The most common commercial lease structures are:

  • Triple net (NNN)

  • Modified gross

  • Full‑service (also called gross)

 

Each structure allocates property taxes, insurance, maintenance, and utilities differently, which means two spaces with the same base rent can have very different total costs once all expenses are included.​

 

Typical expenses addressed in a commercial lease include:

  • Base rent

  • Property taxes and assessments

  • Building insurance

  • Common area maintenance (CAM)

  • Utilities and janitorial

  • Repairs, maintenance, and capital improvements

Triple Net (NNN) Leases

In a triple net (NNN) lease, the tenant pays base rent plus its share of major operating expenses. These usually include:

  • Property taxes

  • Building insurance

  • Common area maintenance (CAM)​

 

On top of that, tenants typically pay their own utilities, janitorial, and interior maintenance. Because the tenant is covering most of the operating expenses, the quoted base rent on a NNN lease is often lower than on a comparable gross lease.

 

Example:
A retail tenant in Anchorage might pay a quoted NNN rate per square foot, plus separate monthly charges for taxes, insurance, and CAM. Those additional charges are based on the tenant’s proportionate share of the building, so a larger tenant pays a larger share.​

 

Pros for tenants:

  • More transparency around operating expenses

  • Often lower base rent

  • Potentially more control over how certain costs are managed​

 

Pros for landlords:

  • More predictable net income

  • Ability to pass through expense increases to tenants​

 

Key things to watch in NNN leases:

  • How CAM is defined, including what services are included

  • Whether capital expenditures can be passed through

  • How and when expense reconciliations occur

Modified Gross Leases

A modified gross lease sits between NNN and full‑service. The tenant pays base rent plus certain agreed‑upon expenses, while the landlord continues to cover others. The exact split is negotiable and can vary from property to property.

 

For example, a tenant might:

  • Pay base rent, its own utilities, and janitorial

  • While the landlord pays property taxes, insurance, and structural maintenance​

 

Because modified gross leases are flexible, it is important to read the lease carefully and clarify which expenses belong to which party.​

 

Pros of modified gross leases:

  • Middle‑ground between NNN and full‑service on total cost

  • Some predictability, with room to negotiate the expense structure

  • Can be tailored to the needs of both landlord and tenant​

 

Common concepts in modified gross leases:

  • “Base year” for operating expenses, where the landlord covers a set level of expenses and the tenant pays increases above that amount

  • “Expense stops,” which cap the landlord’s responsibility and shift additional increases to the tenant

Full Service (Gross) Lease

In a full‑service (or gross) lease, the tenant pays one all‑in base rent, and the landlord covers most or all building operating expenses. These can include:

  • Property taxes

  • Insurance

  • Common area maintenance

  • Standard utilities

  • Basic janitorial services

 

Because the landlord is absorbing these costs, the quoted base rent on a full‑service lease is usually higher than on NNN or modified gross leases. The benefit is simplicity: tenants know their main monthly payment without tracking multiple pass‑through charges, aside from any clearly defined extras.

 

Many multi‑tenant office buildings use full‑service gross structures, sometimes with:

  • A “base year” for operating expenses, or

  • An “expense stop” where tenants share in increases over a defined threshold

 

These details affect how future expense increases are handled and should be reviewed closely.

How Lease Types Affects Total Cost

To understand your true cost, it helps to calculate estimated annual occupancy cost for each space you are considering. That means adding together:

  • Base rent

  • Your share of taxes, insurance, and CAM (if applicable)

  • Utilities, janitorial, and any other charges spelled out in the lease​

 

Two spaces with the same square footage and similar advertised rates in Anchorage or the Mat‑Su Valley can have very different annual costs once you factor in snow removal, heating, property taxes, and common area expenses. Looking at the full picture helps you avoid surprises once you are in the space.

Local Considerations for Alaska Commercial Properties

Alaska’s climate and operating environment can make certain expenses more significant than in other markets. When you review a commercial lease here, pay special attention to:

  • Snow and ice removal responsibilities for parking lots, roofs, and walkways

  • Heating costs, including fuel or utility charges

  • Parking lot repairs, resurfacing, and striping

  • Roof maintenance and replacement provisions

  • Municipal property tax differences between Anchorage, Wasilla, Palmer, and surrounding areas

 

These items can materially affect your occupancy cost and should be clearly addressed in the lease so both landlord and tenant understand who is responsible.

When to Ask For Professional Help

Lease language around NNN, modified gross, and full‑service structures can be technical, and small wording differences may significantly change your long‑term financial obligations. Before you sign, it is wise to:

  • Review the economics of each option, not just the base rent

  • Clarify who pays which expenses today and how increases are handled

  • Ask questions about any terms that are unclear or unfamiliar​

 

Working with a commercial broker who understands Alaska’s markets can help you compare spaces on an apples‑to‑apples basis and avoid costly surprises later.

Get Help With Your Alaska Commercial Lease

If you are evaluating a commercial lease in Anchorage, Wasilla, or the Mat‑Su Valley and want help understanding whether NNN, modified gross, or full‑service is the best fit, Elevate Commercial can help.

 

Contact our team to:

  • Break down the true cost of each lease option

  • Compare different spaces and landlords on equal terms

  • Negotiate lease language that aligns with your business goals and budget

 

You can reach us by phone or email to discuss your situation and next steps, and get support tailored to your Alaska commercial real estate needs.

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