Glossary / Lease terms and deal stages
Also known as: FSG, full service lease, full service rent
A full service gross lease is a lease, common in office buildings, in which the rent includes the building's operating expenses, taxes, insurance, and usually utilities. Increases above a base year or expense stop are typically passed through to the tenant as additional rent.
A.CRE defines a full service gross lease as one "where the tenant pays a base rent and the landlord pays for all operating expenses related to the tenant's occupancy," including common area maintenance, utilities, insurance, and property taxes. The SIOR lease glossary describes full service rent as "an all-inclusive rental rate which includes operating expenses and real estate taxes for the first year."
A.CRE notes that full service gross leases typically include an Expense stop, above which additional expenses pass to the tenant. Others use a Base year. Wikipedia explains that in a full service gross lease, the outgoings are imputed into the price of the lease.
Because the full service rate includes expenses, it is higher than a net rate for the same space. If your commission is a percentage of rent, that higher figure can mean a larger commission base. Pass-throughs above the stop or base year are a separate question. A Grubb & Ellis commission agreement, for example, excluded adjustments for operating expense increases over the base year from its commission calculation.
Which rent figure applies depends on your commission agreement, so read its definition of rent closely on full service deals.
For the tenant, the appeal is a single all-in number for the first year. The trade-off is exposure to any increases above the stop or base year later in the term, which the tenant pays as additional rent on top of the quoted rate.
On full service deals, confirm whether your fee is on the full service rate and whether expense pass-throughs are excluded.
