---
title: "Modified gross lease — Class A Atlas glossary"
description: "The dominant US lease structure — base rent includes operating expenses up to a base year."
canonical: https://classa.info/glossary/modified-gross-lease
pageType: glossary
lastUpdated: 2026-04-01T00:00:00.000Z
license: "CC BY 4.0 with attribution to Class A Atlas (https://classa.info)."
---

> The dominant US lease structure — base rent includes operating expenses up to a base year.

## TL;DR

- 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).

# Modified gross lease

*Lease structure · US*

## Short definition

The dominant US lease structure — base rent includes operating expenses up to a [base year](/glossary/base-year).

## Full definition

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.

## Why this matters for Class A leasing

Modified gross lease is part of the lease structure vocabulary that institutional [Class A](/glossary/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](/topics/cross-border-expansion) occupiers can translate quickly.

## See also

- [Base year](/glossary/base-year)
- [Operating expenses (op-ex)](/glossary/operating-expenses)
- [Triple net lease (NNN)](/glossary/triple-net-lease)

## Related guides

- [How to choose a Class A office: a working framework](/guides/how-to-choose-class-a-office)
- [Tenant improvement allowances: the working guide](/guides/us-tenant-improvement-allowances-explained)

---

Citation: Source: Class A Atlas (https://classa.info/glossary/modified-gross-lease), updated 2026-04-01T00:00:00.000Z.