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The rate on a warehouse listing means nothing until you know which lease structure it assumes. A $1.00 quote and a $1.35 quote on identical spaces can be the same total money, and tenants comparing the two numbers straight across pick wrong every year.
THE SHORT VERSION
- NNN: base rent plus your share of taxes, insurance, and CAM, billed separately and reconciled yearly
- Modified gross: some operating costs baked into the quoted rate, and "some" is defined by the lease, not the label
- Full service: everything in one number, an office-building structure you will rarely see on a warehouse here
- The trap: a lower base rate under one structure can cost more all-in than a higher rate under another
- The fix: normalize every quote to one all-in monthly number before you compare anything
Here is what each structure means in the Salt Lake market, where you will actually run into each one, and how to put two quotes on the same footing before you pick a building.
Triple net, the industrial default
On an NNN lease you pay base rent plus your proportionate share of the building's operating costs: property taxes, building insurance, and common area maintenance. Those charges are billed as a separate estimate and reconciled against actual costs at year end. What sits inside each bucket, and what the reconciliation looks like, is its own topic, and we covered it in what NNN charges cover on a Utah warehouse lease.
Nearly every warehouse and industrial listing in the Salt Lake Valley is quoted NNN. Landlords like it because variable costs pass through instead of eating the rent, and honest ones like that it shows tenants exactly where the money goes. As a tenant, the structure rewards you for asking questions: the base rate is only the start of the math, but every piece of the math is visible.
Modified gross, the negotiated middle
A modified gross lease bakes some of those operating costs into the quoted rate. Which ones is the whole question. One MG lease includes taxes and insurance but passes through CAM. Another includes everything but utilities. The word "modified" is doing a lot of work, and no two landlords modify the same way.
Around here you will mostly see MG on smaller office and retail units inside industrial parks, including some of ours at Broadbent, where separately metering and reconciling a small suite costs more hassle than it is worth. The quoted rate runs higher than the NNN rate on the warehouse next door because costs are inside it, not because the space is more expensive.
The one rule with MG: get the inclusion list in writing. Not "it's modified gross," but which costs are in, which are out, and what happens when the included costs rise. An MG rate that includes this year's taxes tells you nothing about who eats next year's reassessment unless the lease says so.
Full service, the office structure
A full service lease puts everything in one number: taxes, insurance, maintenance, utilities, often janitorial. It is the standard structure in office towers, where hundreds of tenants share systems nobody could meter separately.
You will rarely be quoted full service on a warehouse in this valley. Industrial buildings meter power to the unit and put the tenant's operation in control of its own costs, which is exactly what NNN is built for. If you are coming out of an office lease into your first industrial space, this is the adjustment to make: the quoted number stops being the whole number, and your own utilities become a line you budget yourself.
NNN vs modified gross vs full service on the same space
Treat this as illustration math, not a quote. Take the 2,500 SF unit from our NNN article: $1.00 base plus $0.35 in NNN charges is $3,375 a month all-in. Quoted modified gross with those costs inside, the same space reads $1.35. Quoted full service with utilities in, it reads higher still.
$1.00 vs $1.35
The same 2,500 SF space quoted NNN and modified gross, both $3,375 a month all-in (illustration math).
| Structure | The quoted rate covers | You still pay separately | Where you'll see it in the valley |
|---|---|---|---|
| NNN | Base rent only | Taxes, insurance, CAM, your utilities | Nearly all warehouse and industrial space |
| Modified gross | Base plus some operating costs, per the lease | Whatever the lease excludes, usually utilities | Office and retail units in industrial parks |
| Full service | Operating costs and usually utilities | Little beyond your own operations | Office buildings, rarely industrial |
Same building, same month, three different sticker prices. The structure changes where the costs show up, not whether they exist.
How to compare quotes across structures
Ask every landlord the same question: what is my total monthly check in month one, and what makes it move. On an NNN quote that means base plus the current NNN estimate. On an MG quote it means the rate plus whatever is excluded. On anything, it means asking how escalations work, because an NNN lease typically escalates base rent while the NNNs float, and an MG lease escalates the whole blended number. The warehouse lease calculator runs the NNN version of that math on any listing's numbers.
If you want the market context for what all-in totals look like by size and submarket, the warehouse cost guide covers it, and current listings are on available space.
Common questions
What does modified gross mean on a lease?
It means some of the building's operating costs are included in the quoted rate and some are not, and the lease itself defines which. There is no standard split. Before comparing an MG quote to anything, get the inclusion list in writing.
Is NNN or modified gross better for a tenant?
Neither is cheaper by nature, because the same costs exist under both and the structure only changes where they show up. NNN gives you transparency and an audit trail. MG gives you predictability on the included costs. Compare the all-in monthly number, not the label.
Why are most warehouse leases NNN?
Industrial buildings meter utilities to each unit and carry operating costs that move year to year, so landlords pass those through rather than guess at them in the rent. It also puts the tenant's own usage in the tenant's control, which most operators prefer once they see the math.
Are utilities included in a full service lease?
Usually yes in a true office full service lease. On industrial space, almost never, because your power use depends on your operation. Whatever structure you are quoted, confirm utilities separately before you budget.
Holding two quotes that do not line up? Send both listings over and I will put them on the same all-in footing the same day, which beats discovering the real number at the lease draft.
Comparing two quotes with different structures?
Send me both listings. I'll normalize them to the same all-in monthly number so you're comparing spaces, not lease jargon.
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