Negotiations for leases in Q2 2026 are likely to be more complex as the industrial sector stabilizes in the United States. As of October 2023, the “asking rents” across the nation were $10.18 per square foot (PSF), and the type of lease entered into will dictate who will have financial unemployment related to rising property taxes and increasing costs for insurance as those costs are rising after the pandemic. The total costs for properties can equate to 20% – 40% above the base amount, and clarity for lease terms will be important from the standpoint of cost. Miami being one of the top US markets has base pricing anywhere from 14-20 PSF.
Triple net lease (NNN)
In 2026, the Triple Net (NNN) lease remains the undisputed standard for modern Class A warehouses and institutional portfolios. In this structure, the tenant pays a lower base rent but assumes responsibility for the three “nets” of the building’s operating expenses.
- Property taxes: The tenant’s proportionate share of annual real estate taxes.
- Building insurance: Coverage for the structure (tenants still maintain their own liability and contents insurance).
- Common Area Maintenance (CAM): Expenses for landscaping, parking lot repairs, snow removal, and lighting.
NNN leases shift the inflationary risk from the landlord to the tenant. If property taxes spike due to a municipal reassessment or if insurance premiums rise (a common occurrence in 2026), the tenant’s monthly payment increases automatically. Typically, NNN fees add an additional $2.00 to $6.00 PSF to your base rent depending on the market.
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Gross lease
An NNN lease and a gross lease are complete opposites. With a gross lease, the tenant pays one all-inclusive monthly rent payment, and the landlord bears all responsibility for taxes, insurance, and maintenance costs associated with the property.
There are two main advantages to a gross lease versus an NNN lease: one, it’s easy—you only receive one bill per month, so you don’t have to wonder about whether you’ll get hit with any surprises at the end of the year (at the end of the year, most landlords will send a “year-end reconciling” invoice); and, two, since the landlord takes all of the risk associated with increasing operating expenses, if taxes increase, the landlord has a smaller margin.
Since the landlord is bearing the risk, the base rent amount for a gross lease is much higher than for an NNN lease.
In 2026, the above information regarding gross leases would be relevant primarily to existing warehouses that have been around for a long time and/or have large sub-tenant populations. Presently, there are very few landlords willing to risk providing full-service gross leases for industrial buildings in this tenuous economy. This type of arrangement may only be found in older “incubator-style” buildings or short-term subleases, wherein there were already established overhead costs associated with the properties.
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Modified gross lease: The middle ground
Modified Gross (MG) leases combine the simplicity of a gross lease with the shared-risk aspect of a triple net (NNN) lease. The details of who pays what under an MG lease are very negotiable between tenants and landlords and will appeal to tenants looking to lease space at multi-tenant industrial parks in 2026.
An MG lease typically requires the tenant to pay base rent, utility bills, and janitorial services, and the landlord pays for property taxes and property insurance for the first year (known as the base year of the lease). Many modified gross leases include a clause requiring the tenant to pay the landlord for any new cost incurred above the original operating expenses incurred during the first year of the lease.
MG leases will also appeal to growing businesses that want flexibility in their utility consumption and are seeking protection against larger costs for major structural repairs to the building in which they occupy.
Key 2026 lease clauses to watch
In addition to the three primary frameworks, clauses will continue to change based upon current market dynamics, resulting in greater importance being given to certain types/clauses than was seen in earlier years.
In 2026; landlords will implement fixed annual rents with increases that range from 3% to 5%. This is a significant change compared to the past, where fixed increases were predominantly 3% for over 10 years. The rising interest rates and consistent inflation across various sectors have resulted in these much higher fixed increases.
High specifications for “Class A” warehouse space (such as 36’ clear height & EV-ready power) can almost exclusively utilize their NNN structures. Since these landlords have the ability to demand tenants assume all operational risk associated with their leased space.
Smarter tenants are increasingly negotiating caps on how high their CAM (Common Area Maintenance) charges can go up each year (i.e. 5% cap for controllable expenses). This will provide an additional layer of safety for any tenant who may enter into an NNN type lease arrangement.
Which structure fits your business?
- Choose NNN if you are an institutional-grade company occupying a modern facility and want the lowest possible base rent, even if it means managing fluctuating operating costs.
- Choose gross if you are a small business or startup that requires absolute budget certainty and is willing to pay a premium for that peace of mind.
- Choose modified gross if you are looking for a balance of control and predictability, particularly in multi-tenant “flex” or “small-bay” spaces.
Understanding the difference between these terms is the difference between a successful expansion and a massive budget shortfall. Always calculate your “Total Occupancy Cost” rather than just looking at the sticker price of the rent.
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