The Full-Service (Gross) Lease — One Number, Many Assumptions

Full-service gross: one rent number, landlord pays everything — taxes, insurance, utilities, janitorial, maintenance. The tenant’s simplicity is the landlord’s operating business, which is why the structure dominates multi-tenant office and appears nowhere in the single-tenant net lease world this site covers.

What the one number hides

Full-service rents embed expense assumptions: the landlord priced expected costs plus margin into the quote, and base-year escalation clauses pass future increases through anyway — so the “all-in” simplicity typically lasts exactly one year. Add load factors (paying rent on your share of lobbies and corridors — usable versus rentable square footage diverges 10-20% in office buildings) and comparing a full-service quote to anything else requires the same conversion discipline as modified gross: total occupancy cost, realistic expenses, same square-footage basis.

The landlord’s side of the structure

Owning full-service buildings is operations: vendor contracts, utility volatility, janitorial staffing, expense reconciliations, tenant disputes over base years. Margins live in managing those costs below the embedded assumptions — a genuine business, rewarded accordingly, and the exact opposite of the deposit-the-rent model that NNN owners buy. The structures aren’t better or worse; they’re different jobs. The recurring mistake is inheriting the job unknowingly — buying a “simple” office building whose leases make you a services company with a mortgage.

The takeaway for investors

Structure determines lifestyle. Read the expense provisions before the cap rate: a 7.5% full-service office yield and a 6% absolute-net retail yield can net the same cash with wildly different phone-call volumes. Price your time; the lease types overview maps the whole spectrum.