Leases & Planning · October 9, 2026 · 7 min read

Triple Net vs Gross Lease in BC: What Clinic & Office Tenants Really Pay

In a triple net lease, the tenant pays base rent plus its share of property tax, building insurance and maintenance. In a gross lease, the tenant pays one rent and the landlord covers those costs. The headline numbers are not comparable: the net rent looks lower because the building's costs are billed on top.

Key takeaway. Gross, modified gross and triple net leases differ in who pays property tax, building insurance and common area maintenance (CAM), and so in who carries the risk when those costs rise. Compare offers on total occupancy cost over the full term, including estimated additional rent and the way increases are passed through. In BC, commercial lease terms are set by negotiation rather than a standard form, so the definitions in your lease decide what you pay. This is general information, not legal advice.

The Three Lease Types, Defined

Gross lease: the tenant pays a single rent, and the landlord pays property tax, building insurance and building operating costs out of it.

Triple net (NNN) lease: the tenant pays base rent plus its proportionate share of property tax, building insurance and maintenance or CAM, usually as monthly "additional rent".

Modified gross lease: the tenant pays a single rent that covers some building costs, and pays others separately, such as its own utilities or increases above a base-year amount.

You will also see "single net" and "double net" leases, which pass through fewer of the three costs. In practice the labels are loose. Two leases both called "net" can allocate costs differently, and a "gross" lease can still pass through tax increases. The BC government's guide to tenancy types notes that commercial tenancies are not subject to set terms and can vary substantially depending on what the parties agree to. The Residential Tenancy Act generally does not apply. Read the definitions of "rent", "additional rent" and "operating costs" before you rely on the label.

Who Pays What: NNN vs Gross vs Modified Gross

This is the typical allocation. Your lease may differ, and the wording governs.

The last row is the real difference. A gross lease is not cheaper or more expensive in principle. It moves the risk of rising costs to the landlord, who prices that risk into the rent.

What Additional Rent Actually Contains

Under a net lease the landlord usually estimates the year's property tax, insurance and operating costs, bills the tenant a monthly share, and reconciles against actual costs after year end. If the actual figures come in higher, the tenant pays the difference.

The tenant's share is normally its rentable area as a proportion of the building's. Points worth checking in the operating-cost definition:

• Management or administration fee. Many leases add a percentage on top of operating costs. The lease should state the rate.
• Capital expenditures. Whether roof replacements, HVAC replacement or parking lot repaving can be passed through, and if so whether they are amortised over their useful life.
• Exclusions. Costs of leasing other units, landlord financing, and repairs covered by insurance or warranty are common exclusions to ask for.
• Audit rights. Whether you can review the landlord's reconciliation, and within what period.
• Gross-up. In a partly vacant building, some leases calculate variable costs as if the building were fully occupied, so occupied tenants are not charged for the vacancy.

None of this changes the construction scope of your fit-out. It does change the occupancy cost that the fit-out has to pay back over the term.

Comparing Two Offers on Total Occupancy Cost

Here is a simple illustration. The figures are chosen to make the arithmetic easy and are not BC market rates.

A clinic is choosing between two units of the same size for a 5-year term.

On the estimate, Unit B looks $4,000 a year cheaper. On the reconciled figures it is the same, and from then on the tenant on the net lease carries every increase. Unit B may still be the better choice. The building may be better run, the lease may cap controllable costs, or the location may suit the practice. The point is that the comparison has to be made on total occupancy cost, including increases, rather than on the headline rent.

Ask each landlord for the last two or three years of actual operating cost statements for the building, not just the current-year estimate. A history shows how stable the additional rent has been.

The BC Property Tax Wrinkle

In BC the municipality bills the owner for property tax, and a net lease passes the tenant's share through. That share depends on the building's assessed value, and BC Assessment must value property at its highest and best use. The Province's Development Potential Relief user guide explains the consequence: businesses occupying properties with future development potential can pay tax on a value above their current commercial use.

The same guide describes the relief. Municipalities may, by bylaw, tax all or part of the land value of eligible commercial properties at a lower rate. It is permissive, not mandatory, so it depends on whether your municipality has adopted it. The bylaw may require owners to notify tenants of the relief. If you are looking at a low-rise building on land zoned for much more, ask the landlord how the property tax has moved and whether any relief applies.

What Clinic and Office Tenants Should Ask

Before comparing offers:

1. Which costs are in the rent, and which are additional rent? Get it in writing, by category.
2. What were the actual operating costs and property tax for the last few years?
3. Is there a management fee on operating costs, and at what rate?
4. Can capital repairs be passed through, and how are they amortised?
5. Are there caps on controllable operating cost increases?
6. Who maintains and replaces the HVAC serving your unit? Clinics often add or modify HVAC, and the lease should say who owns, maintains and replaces it.
7. What are your audit rights on the annual reconciliation?

The rest of your pre-signing checks, including power capacity, plumbing and use clauses, are in our commercial lease checklist for clinics. Lease structure also interacts with what the landlord delivers. Our guide to base building vs tenant improvement explains where the landlord's shell ends and your fit-out begins.

If you are planning an office or clinic fit-out and want a construction budget to set against these numbers, see our office renovation contractor page.

Conclusion

A triple net lease starts with a lower rent and adds property tax, insurance and maintenance on top. A gross lease rolls them into one number. A modified gross lease sits between the two. In BC the lease wording, not the label, decides who pays what, because commercial terms are negotiated rather than standardised. Compare offers on total occupancy cost across the term, ask for operating cost history, check how property tax and capital repairs are passed through, and have a lawyer review the lease before you sign.