NNN vs Gross Leases for Colorado Springs Businesses

Are you comparing lease options for a space in Colorado Springs and wondering what your true monthly cost will be? You are not alone. The difference between NNN and gross leases can be confusing, and small details in the lease can change your bottom line. In this guide, you will get plain-English definitions, Colorado Springs specifics on pass-through charges, where each lease type shows up locally, and a practical negotiation checklist. Let’s dive in.

NNN vs gross leases, in plain English

A Triple Net (NNN) lease means you pay base rent plus your share of property taxes, insurance, and common-area maintenance, often called CAM. Your share is usually based on the square footage you lease divided by the building’s rentable area. Landlords estimate these costs monthly, then reconcile the actual costs each year.

A full-service gross lease means you pay a single rent amount. The landlord covers operating costs such as taxes, insurance, utilities for common areas, janitorial where provided, and building services. The rent is set high enough to cover average expenses.

A modified gross or base-year lease sits in the middle. The landlord covers expenses up to a defined base year or expense stop. You pay increases above that level or split certain categories.

Quick comparison

What shows up in NNN and CAM in Colorado Springs

In Colorado Springs, most NNN or modified leases include a familiar list of pass-through costs. Understanding these line items will help you budget accurately.

• Property taxes assessed by El Paso County and local taxing districts
• Building and liability insurance for the structure and common areas
• Common-area maintenance: landscaping, parking lot upkeep, lighting, exterior cleaning, trash removal, and shared signage areas
• Utilities for common areas, including water for landscaping and irrigation
• Snow removal and de-icing services, a meaningful seasonal expense locally
• HVAC maintenance for common systems and elevator servicing where applicable
• Management fees or administrative charges
• Capital reserves or amortized replacements if the lease allows them, often roof, parking lot resurfacing, or HVAC replacements
• Security, fire protection or sprinkler maintenance, and pest control for common areas

Local considerations matter. Winter weather drives snow removal costs, landscaping and water use can add up, and property taxes can spike after reassessments or when special districts add charges. Many multi-tenant retail centers use separate meters or submeters for utilities rather than including them in CAM, so it is smart to confirm how utilities are handled in your building.

Where you will see each lease type locally

Single-tenant retail pads

Drive-thru pads, banks, and gas or convenience sites often use NNN or absolute NNN forms. In absolute NNN, the tenant may carry nearly all responsibilities, sometimes including structural items. Utilities and trash are often separately metered.

Multi-tenant shopping centers

In-line retail spaces are commonly NNN. Anchors may negotiate modified structures. CAM details, reconciliation rules, and caps are negotiated, and costs vary with the tenant mix and how intensively the center is maintained.

Office buildings

Small multi-tenant office buildings and downtown Class A or B towers often use full-service or modified gross leases. Professional services firms and local businesses like the cost predictability that comes with a single monthly number.

Industrial and flex

Warehouses and flex spaces tend to use NNN or modified NNN. Tenants typically handle interior maintenance and utilities, while roof and structure may stay with the landlord or be passed through depending on the lease form.

Medical and specialized uses

Medical users often negotiate modified gross structures, sometimes with specific pass-throughs for HVAC upgrades or higher HVAC usage tied to equipment.

Small storefronts and local retail

Many landlords offer modified gross to simplify billing for small tenants, especially in smaller centers. In strong corridors, landlords frequently prefer NNN to standardize cost recovery.

How to compare offers on total cost

Your goal is to compare apples to apples. Focus on total occupancy cost per square foot, not just base rent.

• Ask for the estimated NNN or gross operating charges per square foot and add them to base rent.
• Request the past two or three years of CAM reconciliations plus the most recent property tax bill and insurance invoices.
• Confirm how utilities are billed, whether they are separately metered or included in CAM.
• Stress-test your budget by asking for an example of a worst-case CAM year, such as a heavy winter with significant snow removal.

If you are reviewing a modified or base-year gross lease, verify the base year is a typical operating year, not an unusually low year that could inflate your increases later.

Which lease fits your business goals

• If you value predictability, a full-service or base-year gross lease can stabilize your monthly cash flow. You will still want clarity on how increases are calculated.
• If you can manage some variability for potentially lower base rent, NNN can work well, especially if you negotiate caps on CAM increases and audit rights.
• If you need a middle ground, modified gross lets you share risk with the landlord, often with a base year that gives you a clear starting point.

Think about your use. A high-traffic retailer that benefits from a well-maintained parking lot might accept higher CAM for better curb appeal. An office user might prefer full-service gross to keep monthly expenses stable.

Key terms that shift your bottom line

Several clauses decide who pays for what and how much it can change over time. Pay special attention to these items during review.

• CAM definition and exclusions, including what counts as routine maintenance versus capital improvements
• Base year or expense stop mechanics, and whether there are caps on annual increases
• Reconciliation timing and your right to audit
• Responsibility for capital items, roof, HVAC, and structural elements
• Insurance requirements and limits, plus who is named as additional insured
• Taxes, including how special district assessments are handled
• Snow removal standards, frequency, and any seasonal caps
• Utilities, metering, and allocation methods
• Rent escalations, fixed increases or CPI adjustments
• Signage rights and compliance with local planning and zoning approvals

Negotiation checklist for Springs tenants and investors

Use this checklist to organize your requests and sharpen your negotiation position.

Documents to request

• CAM reconciliations for the last 2 to 3 years and the coming year’s CAM estimate
• Prior year property tax bills and current assessed value
• Property insurance premium invoices
• Service contracts for landscaping, snow removal, janitorial, HVAC, and elevator maintenance
• Building operating budget and the management fee schedule
• A measurement plan that shows how rentable area was calculated
• Title reports and any easements affecting access, parking, or signage
• Estoppel certificates for existing tenants in multi-tenant properties

Terms to negotiate or clarify

• A precise CAM list with clear exclusions
• A base year that reflects normal operations or a fair expense stop
• Annual caps on CAM increases or caps on administrative fees
• Audit rights with a reasonable window to review statements
• Rules for pro rata share adjustments if space expands or contracts
• Capital expenditure treatment, and whether big-ticket items are amortized
• Responsibility for HVAC, roof, and structural repairs and replacements
• Snow removal standards and winterization responsibilities
• Utility metering and allocation methods for common areas
• Insurance limits and required endorsements
• Treatment of special assessments and tax escalations
• Tenant improvement allowances, ownership at lease end, and permitting duties
• Renewal, expansion, early termination, and subleasing rights
• Rent escalation method and how it applies to gross versus NNN components
• Signage rights, exclusive-use clauses, and coordination with city approvals

Financial modeling and red flags

• Get a written breakdown of total occupancy cost per square foot, including base rent and all estimated operating charges.
• Compare CAM estimates with actual historical reconciliations and local service costs for snow and landscaping.
• For net-leased acquisitions, confirm tenant credit, remaining term, renewal options, and your recourse for deferred maintenance.

Tactics by party

• Tenants: push for caps on CAM, audit rights, and excluding certain capital items from pass-throughs. If predictability matters, ask for modified or base-year gross.
• Landlords and investors: seek longer terms on net leases, pass through predictable expenses, and for gross leases, set a realistic gross-up and include reasonable escalations.

Due diligence specific to Colorado Springs

Plan for winter. Snow removal and de-icing can materially affect CAM. Clarify service standards and whether extreme weather years can trigger a true-up above caps.

Watch water and landscaping. If irrigation is heavy, water and sewer costs can be notable. Confirm whether these are separately metered or pooled in CAM.

Monitor taxes. Property taxes flow from El Paso County assessments and mill levies across city and special districts. After reassessments or district changes, tax pass-throughs can move more than you expect. Your best defense is reviewing recent tax bills and understanding the parcel’s assessment history.

Check signage rules early. Exterior signage and monument positions affect visibility. City planning and zoning approvals may add steps or timelines, so build that into your opening schedule.

A simple process to choose confidently

• Shortlist spaces that fit your location and size needs.
• Request full cost documents and a line-item estimate of NNN or gross operating charges.
• Compare total occupancy costs per square foot across options.
• Stress-test with a harsh winter scenario and potential tax changes.
• Negotiate key protections, such as caps, audit rights, and clear CAM definitions.
• Have your attorney review the final lease language before signing.

When you follow this process, you will know exactly what you are paying for and how to budget over the life of the lease.

Ready to evaluate spaces and terms?

You deserve straightforward advice and a clear cost picture before you sign. If you want local insight on Colorado Springs lease structures and help comparing total cost across options, reach out to John’s team. Start a conversation with John Liese Properties to map your needs, review real numbers, and negotiate terms that protect your business.

FAQs

What is the main difference between NNN and gross leases in Colorado Springs?

• In NNN you pay base rent plus your share of taxes, insurance, and CAM, while in a full-service gross lease you pay one rent that includes most operating costs.

Which property types in Colorado Springs usually use NNN leases?

• Single-tenant pads, multi-tenant retail centers, and many industrial or flex buildings commonly use NNN or modified NNN structures.

How do snow removal costs affect my NNN budget in Colorado Springs?

• Snow and de-icing are seasonal line items in CAM, so heavier winters can raise costs; you can negotiate service standards and caps to manage exposure.

What documents should I ask for before signing a lease in El Paso County?

• Request past CAM reconciliations, the latest property tax bill, insurance invoices, service contracts, the operating budget, and a measurement plan showing rentable area.

Can I cap NNN or CAM increases in a Colorado Springs lease?

• Yes, many tenants negotiate annual caps on CAM increases and keep audit rights, with results depending on your space size and bargaining strength.

Who pays for roof or HVAC replacement under local leases?

• It depends on the form; absolute NNN may shift these to you, while many NNN or modified gross leases keep structural items with the landlord or amortize costs through CAM.

How do I compare two offers with different lease types?

• Convert both to total occupancy cost per square foot by adding base rent to estimated operating charges, then review increases, caps, and responsibility for capital items.