Lease Structure
Full-Service Gross Lease
Tenant pays one rent — landlord covers all expenses
A Full-Service Gross (FSG) lease is structured so the tenant pays one all-inclusive rent, with the landlord covering all property expenses (taxes, insurance, utilities, janitorial, common area maintenance). The landlord prices the rent to cover projected expenses plus profit. Most common in Class A office buildings where tenants prefer predictable costs and landlord manages professionally.
Term
3-10 years + options
Rent Bumps
CPI-linked or fixed 3% annual
Cap Rate
6.0% - 8.0% for Class A office
Tenants
Law firms, financial services, corporate tenants
Who Pays What?
| Expense | Tenant | Landlord |
|---|---|---|
| Property Taxes | — | |
| Building Insurance | — | |
| All Utilities | — | |
| Janitorial | — | |
| Common Area Maintenance | — | |
| Structural Repairs | — | |
| HVAC | — | |
| Interior Repairs | — |
Pros
- +Simple for tenants (one rent payment, no surprises)
- +Attractive for tenant retention
- +Landlord controls quality standards
- +Common in institutional-quality office
Cons
- −Landlord absorbs ALL expense increases
- −Highest active management requirement
- −Base year escalations often capped
- −Requires skilled property management
- −NOI volatility with utility/insurance costs
Common Use Cases
How It Compares
Full-service gross is the opposite end of the spectrum from absolute NNN. Highest operational exposure for landlord, simplest for tenant. Most commonly used in Class A office buildings and some specialty properties.
Investor Perspective
Full-service gross buildings require active management and operational expertise. Not a passive investment. Investors who buy FSG properties typically have in-house management or partner with experienced operators. Return potential depends heavily on expense management and occupancy.
Other Lease Types
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