What's the difference between full service gross and NNN, and which one actually costs more?

In a full service gross lease, the landlord covers operating expenses (taxes, insurance, utilities, common area maintenance) up to a base-year stop, and you pay only the increases above it. In a NNN (triple net) lease, you pay a lower base rent plus your pro-rata share of taxes, insurance, and CAM on top. Modified gross sits in between. The trap: a "cheaper" NNN face rate can cost more than a higher full service gross number once the pass-throughs, base-year stops, and CAM load in. The only honest comparison is fully loaded, on a net effective basis, not the headline rate. Denver office is largely quoted full service gross, while flex and industrial skew NNN.

**By Brian McCririe | June 12, 2026

Two landlords send your CFO two quotes. One reads $34 per square foot. The other reads $22. The $22 building looks like the obvious win, and if your CFO is comparing the two numbers side by side, you've already lost the comparison.

The $34 is full service gross. The $22 is NNN. They are not the same number, and they are not even measuring the same thing. One already includes the operating costs the other one bills you for later.

The face rate tells you almost nothing until you know the structure underneath it. Get the structure wrong and a "cheaper" lease can cost you more every month for the life of the deal.

The three structures, in plain terms

Almost every commercial office quote you'll see in Denver lands in one of three buckets. The difference between them is one thing: who pays the building's operating expenses, and how.

• Full service gross (FSG). The landlord pays the operating expenses (real estate taxes, insurance, utilities, and common area maintenance) and bakes them into one quoted rate. Most FSG leases include a base-year stop: the landlord covers expenses up to the first year's level, and you pay only your share of increases after that. One bill, most of the risk on the landlord early.
• NNN (triple net). You pay a lower base rent, then your pro-rata share of the three "nets" on top: taxes, insurance, and CAM. Those are billed separately and they move with the building's actual costs. The base rate looks cheap because it isn't carrying the expenses yet.
• Modified gross. The middle ground. Some expenses are included in the rate, some are passed through to you. Common version: the landlord covers taxes and insurance, you cover your own utilities and janitorial. Every modified gross lease draws the line in a slightly different place, so the words matter less than the expense schedule.

Denver office is largely quoted full service gross, especially multi-tenant product downtown, in the suburbs, and in Cherry Creek. Flex and industrial space skews NNN. Single-tenant and some newer office buildings can be quoted NNN too. So the first question on any quote isn't "what's the rate," it's "what structure is this rate."

Why the cheaper NNN number can cost you more

Here's where CFOs get caught. The NNN base rate doesn't include the operating expenses. You still pay them. They just show up on a separate line called the NNN load (or the "expense load," "OpEx," or "pass-throughs," depending on who's billing you).

For Denver office, that load commonly runs in the $8 to $15 per square foot range, depending on the building, its taxes, and its services. Load a $22 NNN rate with $12 of expenses and you're at $34 all-in. The same number as the full service gross quote that already covered those costs up to the base year.

Now run the two side by side on a 10,000-square-foot deal:

These figures are illustrative, not quotes. The point is the direction, not the decimals. The "cheaper" $22 building is the more expensive deal, and you only see it once both sides carry the same costs. In a NNN structure you also wear the expense increases directly every year. Taxes go up, insurance goes up, CAM goes up, and the bill follows. Under full service gross with a base-year stop, the landlord absorbs the base and you pay only the increment above it.

The face rate is the number landlords lead with. The fully loaded cost is the number you live with. The gap between them is the whole comparison, and it's the same discipline behind comparing offers on net effective rent rather than the face rate.

The clauses that decide what "full service" really covers

Two leases can both say "full service gross" and cost very different amounts. The language inside the expense section is where the money moves.

• The base year. A base-year stop is only as good as the year it's set to. If the base year lands in a low-expense period (or the landlord deflates it), your pass-through increases start sooner and run higher. Push for a base year that reflects a normalized, fully assessed building.
• Gross-up provisions. If the building isn't fully occupied, expenses get "grossed up" to a near-full level for the calculation. Done fairly, this protects both sides. Done one-sidedly, it inflates your share. In a Denver market where downtown vacancy hit roughly 38.9% in the first quarter of 2026, gross-up language is not a footnote. It's a real number.
• CAM definition and caps. What counts as common area maintenance? Are management fees, capital repairs, and reserves included? Is there an annual cap on controllable expense increases? On a NNN deal especially, an uncapped CAM is an open-ended liability.
• Audit rights. You should have the right to inspect the landlord's expense reconciliation. Without it, you're trusting the math on a bill that grows every year.

None of these clauses show up in the quoted rate. All of them show up in what you pay.

How to compare two offers apples to apples

Whether a deal is FSG, modified gross, or NNN, you can put any two offers on the same footing. The method:

1. Confirm the structure of each quote and pull the operating-expense detail behind it.
2. Load the NNN rate. Add estimated taxes, insurance, and CAM to the base rate to get a fully loaded cost per square foot.
3. Load the full service gross rate. Add your estimated share of expense increases above the base year across the term.
4. Subtract concessions. Deduct the value of free rent and landlord-funded tenant improvement dollars. In this market, that matters: Denver free rent is running roughly one month per year of term (6 to 12 months on a 7-year downtown deal), and TI allowances range from about 25% to 150% of one year's base rent.
5. Convert to net effective rent. Divide each deal's remaining total by the rentable square feet and the number of years, then compare.

Run that and the headline rate stops mattering. Net effective rent in Denver right now is sitting 25% to 35% below face, and the structure determines how much of that discount you actually capture. The deal that quoted higher often wins once the concessions and pass-throughs are in the same column.

This is the part that's hard to do from a desk. Estimating a fair NNN load, judging whether a base year is honest, and pricing a CAM cap all take someone who sees what these buildings are actually charging this quarter, not what a generic rule of thumb says. That's where the comparison earns its keep.

Match the structure to the decision, not just the number

The right structure depends on what you're solving for. If you want budget certainty and a single predictable bill, full service gross with a tight base year and a clean gross-up is usually the cleaner instrument. If you're a strong-credit single tenant taking a whole building and you'll control the operating costs anyway, a NNN structure can work in your favor because you're paying actuals instead of a landlord's padded estimate.

The mistake is choosing the structure by which face rate looks smaller. It's the same mistake as sizing your footprint to the wrong number: the headline feels like the decision, but the real cost lives one layer down. Decide on fully loaded economics, then negotiate the clauses that protect them.

Frequently asked questions

What is the difference between full service gross and NNN?

In a full service gross lease, the landlord pays the building's operating expenses (taxes, insurance, utilities, common area maintenance) and folds them into one quoted rate, usually with a base-year stop so you only pay increases above the first year's expense level. In a NNN (triple net) lease, you pay a lower base rent plus your pro-rata share of taxes, insurance, and CAM on top, billed separately. The full service gross number looks higher because it already includes the expenses the NNN rate makes you pay later.

Why does a cheaper NNN rate sometimes cost more than a higher full service gross rate?

Because the NNN base rate excludes the operating expenses you still have to pay. Once you add the NNN load (often $8 to $15 per square foot for office, depending on the building), a $22 NNN rate can land at $30 to $37 all-in, above a $34 full service gross rate where most of those costs are already covered up to the base year. You only see the real difference when you load both deals to a fully loaded number and compare net effective rent, not the face rate.

What is a base year stop in a full service gross lease?

A base year stop sets the operating-expense level for the first year of your lease as the baseline the landlord covers for the whole term. You pay your pro-rata share of any increase above that base year, but not the base amount itself. Negotiating the base year and how expenses get grossed up matters: a low or artificially deflated base year shifts more cost onto you in later years.

Is Denver office full service gross or NNN?

Denver office space is largely quoted full service gross, especially multi-tenant downtown, suburban, and Cherry Creek buildings. Flex and industrial space skews NNN, where you pay base rent plus taxes, insurance, and CAM separately. Single-tenant and some newer office product can also be quoted NNN, so always confirm the structure before you compare two quotes.

How do you compare a full service gross offer to a NNN offer?

Convert both to a fully loaded annual cost per square foot, then to net effective rent. For the NNN deal, add the operating-expense load (taxes, insurance, CAM) to the base rate. For the full service gross deal, add your estimated share of expense increases above the base year. Then subtract concessions like free rent and tenant improvement dollars and spread the total across the full term. The lower net effective number is the better deal.

The bottom line

Full service gross and NNN aren't two prices for the same thing. They're two ways of splitting the same costs, and the split decides what you actually pay. A higher full service gross rate already carries the taxes, insurance, and CAM up to a base year. A lower NNN rate hands those back to you, plus every increase, every year. Compare the face numbers and you'll pick the wrong deal. Compare them fully loaded, on a net effective basis, and the real winner shows up.

This is the analysis I run with every occupier before we sign anything: confirm the structure, load both offers to the same footing, pressure-test the base year and the CAM, then look at net effective rent. Lease economics and expense schedules shift quarter to quarter, so confirm any structure against your own counsel and CFO before you commit. Nothing here is a guarantee of a specific outcome.

If you're working through a lease decision in Denver, whether that's a renewal, a relocation, or a footprint question your CFO is pushing on, I'm happy to run the numbers with you. Schedule a conversation at calendly.com/mccririe.

About Brian McCririe
Brian McCririe is Managing Director of SVN | Denver Commercial and National Council Chair for Occupier Services across the SVN network. After 25 years representing tenants and investors across global markets, he now focuses on the Denver Metro area helping companies navigate leases, acquisitions, and the gap between what landlords offer and what occupiers deserve. He leads one of the metro's top tenant rep practices and writes about the deals, decisions, and market shifts that matter to corporate real estate leaders.