The dominant US lease structure — base rent includes operating expenses up to a base year.
Lease structure · US
The dominant US lease structure — base rent includes operating expenses up to a base year.
Under a modified-gross structure, the tenant pays a fixed base rent that includes operating expenses calculated for a base year (typically the first full calendar year of the lease). In subsequent years, the tenant pays escalations equal to the increase in operating expenses over the base year. This shields the tenant from year-one operating expense volatility while passing through subsequent inflation.
Modified gross lease is part of the lease structure vocabulary that institutional Class A occupiers, landlords, and advisers use across US markets. Understanding it correctly affects how you read lease documents, model occupancy economics, and benchmark deal terms across cities. Class A Atlas tracks the US definition alongside the global standard so cross-border occupiers can translate quickly.