Understanding Commercial Retail Real Estate Leases
Why This Matters for Your Business
Leasing a retail space in North Texas — be it Frisco, McKinney, Allen, Plano or beyond — is about far more than a monthly rent check. Commercial leases can hold hidden costs, varied structures and long-term implications for your business’s bottom line. With so many local areas booming (Collin County, Dallas, Denton, Grayson, Tarrant and surrounding cities), you want not just a location that works — but a lease that works for you.
Types of Commercial Retail Leases
Let’s walk through the main lease structures so you can see where your responsibilities (and opportunities) lie:
1. Gross Lease (Full-Service Lease)
In this setup, your monthly rent covers most (or all) property operating expenses — taxes, insurance, maintenance. The landlord handles those. It’s simpler and more predictable, but typically found in offices rather than high-traffic retail.
2. Modified Gross Lease
A hybrid model: you pay base rent plus certain costs (utilities, some maintenance) while the landlord still covers major items. The allocation is negotiated in the lease. It offers more stability than a full-net lease but less transparency than a gross lease.
3. Triple Net (NNN) Lease
Perhaps the best known in retail, the Triple Net (NNN) lease requires tenants to pay base rent plus three major expense categories — property taxes, property insurance, and Common Area Maintenance (CAM) fees.
Landlords favor this model because it shifts more financial responsibility to the tenant, while business owners gain more transparency and control — often with a lower base rent — though budgeting accuracy becomes essential (Investopedia, 2025).
Other Tenant Expenses to Expect
Beyond monthly rent and NNN charges, retail tenants often face additional costs — it pays to know them ahead of time.
- Utilities and Services – Electricity, gas, water, trash: many tenants pay these themselves.
- Maintenance & Repairs – Even if CAM covers shared spaces, you may be fully responsible for your space’s HVAC, plumbing, fixtures.
- Build-Out & Tenant Improvements (TI) – If you’re renovating for your brand, negotiate TI allowances — or be ready to pay.
- Marketing & Signage Costs – Shopping centers may require contributions to centre-wide marketing or have signage restrictions that cost more.
- Percentage Rent – In some prime retail settings, you may pay an extra rent percentage of gross sales above a threshold.
- Security Deposits & Insurance Requirements – Typical in commercial leases; check required minimums and coverage.
Why Location + Lease Type Makes All the Difference
Location is still king — but the lease structure and expense clarity can make or break your profitability.
In fast-growing North Texas markets, you want a space near top traffic flows, major employers, and strong community infrastructure. Combine that with transparent lease terms, and you’re much more likely to
thrive rather than simply survive.
Smart Tenant Checklist Before Signing
To protect your business, here are action items most other agents may neglect:
- Confirm which expenses are covered in base rent versus passed through (especially in NNN leases).
- Ask for past CAM reconciliations — what did tenants pay in previous years?
- Negotiate tenant improvements (TI) and get them in writing.
- Clarify maintenance responsibilities: who maintains the roof, exterior, and structural elements?
- Review lease escalation terms — how often will base rent or NNN expense roll-ups occur?
- Factor the total cost per square foot = base rent + estimated NNN or other pass-throughs.
- Consult a commercial real estate attorney or advisor — commercial leases are far more complex than residential.
Your lease is more than a piece of paper. It’s a financial tool that affects your business and your bottom line. Choose the lease type that matches your business model, know the costs you’re taking on, and partner with a commercial real estate professional who knows the North Texas market — especially in the explosion of sites in Collin County.
For more information about commercial leases call us today!
Commercial Real Estate - Division Manager
817-846-7148
Team Lead
469-499-7452
Sources:
- Investopedia. “Triple Net Lease (NNN): Definition, Uses, and Investment Insights.” Retrieved October 2025, from https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp
- Law Cornell Legal Information Institute (LII). “Triple net lease.” Retrieved October 2025, from
https://www.law.cornell.edu/wex/triple_net_lease
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