Comparing commercial leases in Chicago

Gross and net are labels, not complete budgets

Gross lease

Typically bundles some building expenses into rent, but utilities, increases, exclusions, and other charges can remain separate.

Modified gross lease

Divides expenses between landlord and tenant according to the negotiated agreement. Ask exactly which expenses are included and which change over time.

Net or triple-net (NNN) lease

Commonly assigns taxes, insurance, and maintenance expenses to the tenant in addition to base rent. The label does not establish who pays for roof, structure, capital repairs, or every operating expense.

Common area maintenance (CAM)

A category of shared property costs whose definition, allocation, exclusions, reconciliation, and review rights should be read in the lease.

Confirm whether an advertised rate is annual or monthly, the area basis, and the currency. Request the expense estimate and the history behind it; estimated pass-through charges may differ from the eventual reconciliation.

Build a total occupancy-cost comparison

For each option, separate recurring expenses, upfront costs, refundable security, and later capital obligations. Use the same lease term and area measurement, and show scheduled increases rather than comparing only the first year.

• Recurring: base rent, pass-through taxes and insurance, CAM, utilities, maintenance contracts, parking, and any other required charges.
• Upfront: professional review, permits, buildout, equipment installation, relocation, and any costs not reimbursed by a tenant-improvement allowance.
• Cash tied up: security deposit, prepaid rent, or letter-of-credit requirements. Refundable security is a liquidity requirement, not automatically an operating expense.
• Contingent: expense increases, major repairs assigned to the tenant, delayed delivery, restoration at exit, and costs if the operation changes.

Ask for the assumptions behind each number. Where the amount is unknown, use an explicitly labeled estimate and test a higher-cost case instead of treating it as zero.

A lease-review checklist

1. Premises and use: confirm the exact space, shared areas, permitted use, parking, loading, yard rights, and operating restrictions.
2. Term and delivery: distinguish possession, rent commencement, substantial completion, and the conditions needed to operate.
3. Improvements: document scope, approvals, allowance, reimbursement conditions, overruns, ownership, and removal obligations.
4. Repairs: allocate ordinary maintenance and major replacements, including HVAC, roof, structure, pavement, and fire protection.
5. Expenses: review allocation percentages, exclusions, caps where negotiated, reconciliation procedures, and document-review rights.
6. Risk: review insurance, indemnity, casualty, condemnation, default remedies, and any personal guaranty with counsel.
7. Flexibility: examine renewal options, notice deadlines, assignment, subleasing, expansion, termination, and end-of-term restoration.

A letter of intent can help organize negotiations, but its binding effect depends on its wording and the circumstances. Have counsel review it before signing; do not assume every term is nonbinding.

Make the occupancy schedule credible

Check zoning and building requirements before relying on a move-in date. Plan for design, permits, utilities, construction, inspections, and equipment commissioning. For industrial space, review loading, power, storage, and fire-protection suitability early; these can change both budget and timing.

Put dependencies in writing: which party delivers each item, the evidence of completion, and the consequence of delay. Confirm the timetable with the relevant authority and contractors rather than assuming an advertised “available now” means ready for your business.

Sources and next steps

• Chicago zoning map — initial city zoning research; confirm the proposed use.
• Chicago Department of Buildings — permitting, inspection, and code resources.
• Cook County Treasurer — tax-bill verification when reviewing a Cook County property’s expense history.

Use the property-research guide to confirm jurisdiction and public records. If buying instead of leasing, use the purchase-diligence guide.