Final answer:
In a gross lease, most costs of ownership are included in the tenant's base rent, with the landlord covering expenses like taxes, insurance, and maintenance, which are factored into the rent.
Step-by-step explanation:
Most costs of ownership are reflected in the base rent charged to the tenant with a gross lease. In this type of lease arrangement, the landlord assumes most of the property's expenses, including taxes, insurance, and maintenance. These costs are factored into the base rent. In comparison, a net lease may have lower base rent, but the tenant would be responsible for a greater share of the property's operating costs. The concept of a gross lease aligns with the first rule of economics where you do not get something for nothing; the higher base rent compensates for the landlord's assumption of running costs and fixed costs are often evident in this model, as opposed to variable costs that fluctuate with the level of production or usage, like with a net lease on a factory or retail space.