The main commercial lease types in Colorado, triple net, gross and modified gross: who pays what, real Colorado lease rates and what to negotiate.
A commercial lease is the contract that lets a business rent office, retail or industrial space, and it sets who pays the rent and who pays the building’s costs. The main types are net leases, where the tenant pays some or all of the property expenses, and gross leases, where the landlord pays them.
In a triple net (NNN) lease, the tenant pays taxes, insurance and maintenance on top of rent. In a gross lease, the tenant pays one flat rent. A modified gross lease splits the costs.
This post explains each lease type with Colorado rates, then covers what to negotiate and whether to lease or buy. RMCRE brokers negotiate leases across Colorado through lease representation for owners and tenants.
Why the Lease Type Matters
The lease type decides who carries the risk of rising building costs. Two spaces with the same quoted rent can cost a tenant very different amounts each year.
The building’s expenses are often grouped as “the three nets”: property taxes, insurance and maintenance. Each lease type answers one question: which of the three does the tenant pay, and which does the landlord keep?
For a landlord, the lease type also shapes income. In a net lease, the owner receives rent after the passed-through costs are paid. In a gross lease, the owner pays the costs out of the rent, so a jump in taxes or snow removal cuts the owner’s income.
Net Leases: Single, Double and Triple Net
In a net lease, the more “nets” there are, the more of the building’s costs the tenant pays.
| Lease | Tenant pays on top of rent | Landlord keeps |
|---|---|---|
| Single net (N) | Property taxes | Insurance and maintenance (this type is uncommon) |
| Double net (NN) | Property taxes and building insurance | Structural repairs and common area maintenance |
| Triple net (NNN) | Taxes, insurance and maintenance, including common area costs | Little beyond the structure, depending on the lease |
In buildings with several tenants, the passed-through costs are usually split by each tenant’s share of the square footage.
The tenant’s exact duties are listed in the written lease, so two “NNN” leases can still differ. One may make the tenant replace the roof; another may leave the roof and structure with the landlord.
Triple Net Leases in Colorado
Colorado office, flex and retail rents in RMCRE’s 2026 reports are often quoted plus NNN.
Class A office in Glenwood Springs leases at about $25 per square foot plus NNN, about $37 all-in. New Class A flex space there runs about $27 plus NNN, about $32 all-in. NNN rents on commercial property in Pagosa Springs run $18 to $24 per square foot. In Durango, NNN retail with established tenants trades at 5% to 7% cap rates.
The most extreme form, an absolute or bondable NNN lease, puts every property risk on the tenant.
How an NNN lease works in practice
An NNN tenant pays base rent plus a monthly estimate of the three nets. The landlord compares the estimates with actual costs after the year ends and bills or credits the difference.
Triple net is most often used for freestanding commercial buildings. In multi-tenant centers, the tenant also pays a share of common area maintenance (CAM). CAM is sometimes negotiated up front as a fixed amount per square foot. The split, caps and yearly true-up are covered in how CAM caps and reconciliations work.
Colorado property taxes inside an NNN lease
Property tax is usually the largest of the three nets. In Colorado, the 2026 assessment rate is 25% for most commercial buildings, down from 27% in 2025.
County treasurers set the payment schedule. In Garfield County, for example, the full year’s tax is due April 30, or in halves on the last day of February and June 15. Late payments accrue interest at 1% per month. An NNN tenant pays these taxes through monthly estimates, so a change in the assessment rate flows through to the tenant’s bill.
Absolute NNN leases
In an absolute NNN lease, the tenant bears nearly all real estate risk. That includes rebuilding after a fire even when insurance falls short, and paying rent with no right to end the lease or reduce it.
These leases usually go to strong credit tenants, and the property is valued mainly on that steady income. A common source is a sale-leaseback, where a business sells its building and leases it back; see how a sale-leaseback creates a long-term net lease.
Gross and Full-Service Leases
In a gross lease, the tenant pays a flat rent and the landlord pays the operating expenses, including taxes, electricity and water.
Gross rents are usually higher, because the landlord builds the expenses into them. A full-service gross lease folds all operating costs into the rent. In the Roaring Fork Valley, Class B flex space leases at about $25 per square foot gross.
Base years and expense stops
Many full-service office leases still protect the landlord against rising costs. They do it with a base year or an expense stop.
- Base year: a calendar year, usually the signing year or the year before, sets the baseline. The tenant pays its share of any increase above that year’s costs.
- Expense stop: a fixed per-square-foot amount of operating expense is built into the rent. The tenant pays its share of costs above that amount.
So a “gross” office lease in Denver or Colorado Springs is rarely fixed for its whole term. Read the operating expense clause before comparing offers.
Modified Gross Leases
A modified gross lease sits between gross and net: tenants typically pay a proportional share of operating expenses.
Exactly which costs the tenant pays is set in the written lease. Compare offers on an all-in basis, rent plus every cost, so a modified gross quote can be lined up against an NNN quote.
The term has no standard version. One modified gross lease may pass utilities to the tenant; another may pass a share of taxes. The expense list in the lease is the whole definition, so read it line by line.
Percentage Leases in Resort Retail
A percentage lease ties part of the rent to the tenant’s sales. The tenant usually pays a fixed base rent plus a percentage of sales above a threshold called the breakpoint.
The natural breakpoint equals the annual base rent divided by the percentage rate. As an illustration, $60,000 base rent at 6% gives a breakpoint of $1,000,000 in sales. On $1,200,000 in sales, the tenant pays 6% of the extra $200,000, or $12,000, on top of base rent.
Percentage rent suits retail with uneven income. Landlords may set base rent below market and recover the difference in peak months. That pattern fits shops and restaurants in ski towns such as Aspen, Steamboat Springs and Breckenridge, where sales rise with the seasons.
Ground Leases
A ground lease rents the land, and the tenant builds on it.
Under a ground lease, the tenant holds a leasehold interest and usually pays the same items as under a net lease.
Ownership of the building generally returns to the landowner when the ground lease ends. Tenants and their lenders therefore look closely at the remaining term before they build or buy.
Comparing Lease Types Side by Side
The table shows who usually pays each cost under each lease type. Individual leases can change any line.
| Cost | Gross / full service | Modified gross | Double net (NN) | Triple net (NNN) | Absolute NNN |
|---|---|---|---|---|---|
| Base rent | Tenant | Tenant | Tenant | Tenant | Tenant |
| Property taxes | Landlord | Varies | Tenant | Tenant | Tenant |
| Building insurance | Landlord | Varies | Tenant | Tenant | Tenant |
| Common area maintenance | Landlord | Varies | Landlord | Tenant | Tenant |
| Roof and structure | Landlord | Landlord | Landlord | Varies | Tenant |
| Rising-cost risk | Landlord, above any base year | Shared | Mostly landlord | Tenant | Tenant |
Worked example: NNN quote vs gross quote
Two offers come in for a 2,500-square-foot office. Offer A is $25 per square foot plus NNN, with NNN estimated at $12. Offer B is $35 per square foot full-service gross.
- Offer A all-in: $25 + $12 = $37 per square foot, or $92,500 a year.
- Offer B all-in: $35 per square foot, or $87,500 a year.
- Offer B looks $5,000 a year cheaper, but check its base year. If expenses rise, the tenant pays the increase anyway.
The $12 NNN estimate in this illustration matches the gap RMCRE reported in Glenwood Springs, where $25 plus NNN equals about $37 all-in. Local rents by town are in Colorado office rents by town.
Which Lease Type Fits Which Property
Lease type tends to follow property type and market.
- Freestanding retail and single-tenant buildings: usually triple net or absolute net, since one tenant controls the whole site.
- Multi-tenant retail and flex centers: usually NNN with CAM, split by square footage.
- Multi-tenant office: often full-service gross with a base year in larger metros. CBRE reports Denver office rents on a full-service gross basis.
- Smaller-market office: often NNN. CBRE reports Colorado Springs office rents on an NNN basis, and RMCRE quotes Glenwood Springs office plus NNN.
- Seasonal resort retail: sometimes base rent plus percentage rent.
What to Negotiate in a Colorado Commercial Lease
In a Colorado commercial lease, negotiate the terms that matter over years: escalations, renewal options and who pays for what.
- Escalations: how the rent rises each year.
- Renewal options: the right to stay, and at what rent.
- Snow removal: who pays for it, a duty often written into Colorado leases.
- CAM reconciliation: how shared costs are settled each year.
In 2026, tenants have more leverage in some office and flex markets as vacancy ticks up. Colorado Springs office vacancy, for example, rose to 15.04%.
Two more items deserve attention under any lease type. First, the expense list: what counts as an operating cost, and what is excluded. Second, the build-out: who pays to fit out the space, covered in how build-out allowances work. The full set of clauses is in the clauses inside the lease document.
Mistakes to Avoid
- Comparing base rents only. An NNN rent and a gross rent are not the same unit. Convert both to all-in cost.
- Ignoring the base year. A full-service lease with a low base year can pass rising costs to the tenant from year two.
- Assuming “NNN” means the same thing everywhere. Roof, structure and capital repairs can fall on either side.
- Skipping the mountain costs. Snow removal is a regular line item, and RMCRE’s Durango outlook notes that mountain weather speeds up building wear.
- Signing without an attorney. A lease is a long contract with real legal risk; have a Colorado real estate attorney review it.
Should You Lease or Buy?
Lease to keep your cash free and stay flexible; buy to build equity and control the space.
Owning lets you build equity and lease out space you do not need, but it brings a down payment and upkeep. RMCRE’s consultants analyze lease-or-own decisions for occupiers. Before deciding, read what it takes to own your building.
Frequently Asked Questions
What is the most common commercial lease in Colorado?
There is no single standard. Retail, flex and smaller-market office space is often quoted plus NNN, as in Glenwood Springs and Pagosa Springs. Larger office markets such as Denver are commonly reported on a full-service gross basis.
Is a triple net lease good for a tenant?
It can be, because base rent is lower and the tenant sees the real costs. The tenant also carries the risk that taxes, insurance or maintenance rise. It suits tenants who want control and can budget for changing costs.
What is the difference between gross and modified gross?
In a gross lease the landlord pays the operating costs. In a modified gross lease the tenant pays some of them, usually a share set out in the lease. The written expense list decides the split.
Who pays property taxes in a commercial lease?
The landlord pays the county, but the lease decides who bears the cost. In an NNN or double net lease, the tenant repays its share. In a gross lease, the landlord absorbs it, often above a base year.
How long are commercial leases in Colorado?
Terms vary by property and tenant. RMCRE’s Durango outlook points to existing five-year triple net leases with established operators as a passive investment option. Longer terms usually come with renewal options and scheduled escalations.
Lease Advice From Local Brokers
RMCRE’s consulting work includes lease analysis and occupancy decisions. Because members broker local deals, a renewal talk starts from real local rents. For owners, RMCRE also offers landlord-side lease management.
Rocky Mountain Commercial Real Estate has connected partner brokers across Colorado mountain towns since 2010. We work with tenants and landlords in towns such as Glenwood Springs, Durango and Pagosa Springs.
