Industrial Lease Structures Explained: Net Rent, TMI, Gross Rent & CAM (2026 Ontario Guide)

The number a landlord quotes you in a press release and the number you actually pay every month are rarely the same. In the Ontario industrial market, all-in rent — net rent plus additional rent — is what matters, and understanding how each layer is built, escalated and recovered is the single biggest lever a tenant has to save money on a 5- or 10-year deal.

This guide walks through the five lease structures you will see in the GTA, how TMI and CAM are actually calculated, how to read an operating expense statement, and where professional tenants negotiate. It is written for CFOs, operations leaders, 3PL owners and any business signing more than 20,000 square feet of warehouse space in Ontario in 2026.

1. The five lease structures you will see in Ontario

Canadian industrial leases fall on a spectrum. From the tenant's point of view, "more net" means more cost risk flows to you; "more gross" means the landlord takes it.

• Absolute Net (NNNN / Bondable) — the tenant pays everything, including roof and structure. Rare outside of long-term sale-leaseback deals with single credit tenants.
• Triple Net (NNN) — the standard for multi-tenant and most single-tenant GTA industrial buildings. Tenant pays realty taxes, building insurance and all operating/maintenance costs through additional rent. Landlord remains responsible for structure and roof membrane.
• Double Net (NN) — tenant pays taxes and insurance; landlord retains maintenance. Uncommon in the GTA but sometimes offered on older single-tenant properties.
• Modified Gross / Industrial Gross — base year expenses are baked into the rent and the tenant only pays increases above a stated base year. Seen in suburban flex/office-warehouse product.
• Full-Service Gross — a single rental rate covers everything. Almost non-existent in pure industrial; occasionally found on small last-mile units under 5,000 sf.

CBRE Canada and Colliers Canada both report that more than 90% of GTA industrial leases transacted in the last 12 months were true triple-net, so we will focus the rest of this guide there.

2. What "net rent" really is

Net rent is the landlord's return number. It pays down the mortgage, provides the investor's yield, and is the figure that gets marked to market at renewal. Listings are quoted "$18.00 net, $5.50 additional" or similar. Two things to remember:

• Net rent escalates. Expect 3.0–4.0% per year in 2026 GTA deals. On a 10-year lease starting at $18.00, you will end at roughly $24.00 in year 10 at 3%, or $25.60 at 4%.
• Net rent does not include realty taxes. The "net" in NNN literally means net of taxes, insurance and operating costs. Tenants new to industrial often assume taxes are in the net figure; they are not.

If a landlord quotes a single "all-in" or "gross" number, stop and ask for the breakdown. You need to see net and additional rent separately to benchmark the deal against market and to understand what will escalate.

3. TMI: Taxes, Maintenance, Insurance (aka Additional Rent)

Additional rent — often called TMI in Ontario and CAM (Common Area Maintenance) in the United States — is meant to be a pass-through at cost, not a profit centre. In a well-run multi-tenant industrial building in 2026, you should see TMI land in the following ranges per square foot per year:

• Realty taxes: $2.50 — $4.50 in the GTA, varying significantly by municipality and assessment. Brampton, Vaughan and Mississauga tend to sit in the middle; Toronto and Etobicoke run higher. Confirm the commercial tax rate on the municipality's website (for example, City of Mississauga property taxes).
• Building insurance: $0.25 — $0.75. Has climbed materially post-2020.
• Common area operating costs: $1.25 — $3.00. Landscaping, snow removal, common-area electricity, parking lot repairs, roof maintenance reserve (see caveat below), property management fee, and exterior building maintenance.
• Management fee: 3%–5% of operating costs, charged on top. Always negotiate the base against which it is calculated.

Add those up and realistic 2026 GTA TMI ranges from $4.50 to $8.00 per square foot, depending on municipality, age and tenant mix. Anything above that range deserves a line-by-line audit.

4. How TMI is billed and reconciled

The mechanic is almost always the same:

1. Landlord estimates next year's operating costs and divides by the building's rentable area to arrive at an estimated additional rent per square foot.
2. Tenant pays one-twelfth of the annual estimate each month alongside net rent.
3. Within 90–180 days of the landlord's fiscal year-end, the landlord issues a reconciliation statement showing actual costs. If actuals exceeded estimates, you owe a top-up; if actuals were lower, you get a credit.
4. The estimated rate for the following year is adjusted to reflect actuals plus inflation.

REALPAC's operating expense reporting guideline is the Canadian industry standard and a useful benchmark when auditing a landlord's statement.

5. What belongs in TMI and what does not

This is where tenants overpay. Landlords frequently bundle items into TMI that a well-drafted lease would exclude. Push to exclude the following from the operating cost pool before you sign:

• Capital expenditures beyond a de minimis threshold — roof replacement, parking lot resurfacing, HVAC replacement. Only the amortised portion (with a reasonable useful life and a market interest rate) should flow through.
• Structural repairs — foundation, load-bearing walls, roof structure. These belong to the landlord.
• Environmental remediation caused by the landlord or a prior tenant.
• Leasing commissions, marketing and tenant build-out costs for other tenants.
• Income and capital taxes of the landlord.
• Depreciation and mortgage interest.
• Administrative overhead beyond a capped management fee.

These exclusions are standard in well-negotiated Canadian industrial leases. If your landlord resists all of them, it is a signal the building is being run as a profit centre on expenses rather than on rent.

6. Caps on additional rent

The most valuable TMI negotiation is a cap on controllable operating expenses. Uncontrollable costs (realty taxes, insurance, utilities, snow removal) pass through at cost. Everything else — management fees, landscaping, non-emergency repairs, general building maintenance — is capped at an annual increase, typically 4%–5%. Over a 10-year term this can save tenants $1.00–$2.00 per square foot per year.

In larger deals (50,000 sf+), also ask for:

• A base-year stop for taxes: the tenant pays only the increase over the base year.
• An audit right: the tenant can audit the landlord's records once per year, with costs borne by the landlord if an overcharge of 3%+ is found.
• A right to reclassify: if the landlord switches a cost from capital to operating (or vice versa), the tenant has the right to challenge.

7. A real 2026 example: 50,000 sf in Brampton on a 7-year lease

Let's run the math on a representative deal. Assume 50,000 sf of modern distribution space in Brampton, 36' clear, 8 dock doors, 1,200 amps at 600V, listed at $17.50 net + $5.75 TMI on a 7-year term with 3.5% annual escalations.

Year 1 gross cost: ($17.50 + $5.75) × 50,000 = $1,162,500, or about $96,875 per month.

Year 7 gross cost (with 3.5% escalation on net rent and 2.5% inflation on TMI): approximately ($22.03 + $6.67) × 50,000 = $1,435,000, or about $119,600 per month.

Total 7-year occupancy cost before free rent and TIA: roughly $9.0 million.

If the tenant negotiates:

• 3 months of free rent on a gross basis (value: ~$290,000)
• $12/sf tenant improvement allowance (value: $600,000)
• Cap on controllable operating expenses at 4% (saves ~$80,000 over the term)
• Net rent escalation at 3.0% instead of 3.5% (saves ~$125,000)

Total concessions: approximately $1.1 million, or roughly 12% of the gross deal. That is typical upside available to a prepared tenant in today's market — and almost all of it is lost by tenants who negotiate only the headline net rent.

8. Operating expense audits: when and how

An operating expense audit is a tenant right under most institutional leases. Trigger an audit if any of the following happens:

• The year-over-year increase in additional rent exceeds 10% without an obvious utility or tax reason.
• Your actual reconciliation differs from the landlord's estimate by more than 15%.
• The management fee rate appears higher than market (3%–5% is the norm).
• Capital items appear in the operating pool without amortisation.

Most audits are conducted by a specialised lease audit firm on a contingency basis. Typical recoveries on GTA industrial leases range from 2% to 8% of three years' additional rent. Even well-run buildings usually contain small errors; large multi-tenant buildings often contain meaningful ones.

9. Utilities: the silent fifth line

Utilities are not technically TMI — tenants pay them directly to the utility in most GTA industrial buildings — but they are a major occupancy cost that deserves attention alongside the lease. For a 50,000 sf distribution warehouse in Brampton running 1,200 amps, expect:

• Electricity: $40,000–$120,000 per year, depending on process loads. Rates are set by the Ontario Energy Board.
• Natural gas (heating): $25,000–$55,000 per year.
• Water/sewer: $3,000–$10,000 per year.

In shared-meter buildings, utilities are bundled into TMI and pro-rated. Always check meter configuration at LOI stage.

10. Tax reassessments mid-term

Ontario's Municipal Property Assessment Corporation (MPAC) reassesses commercial properties on a cycle (most recently paused and scheduled to resume). A mid-term reassessment can spike your realty taxes 10%–30% overnight. Two protections to write into the lease:

• A base-year protection that caps your exposure to reassessment-driven increases above a threshold.
• A right to contest the assessment (alone or jointly with the landlord).

11. Your pre-signing checklist

1. Obtain 3 years of historical operating expense statements for the building.
2. Model total occupancy cost per square foot in each year of the term, not just year one.
3. Benchmark TMI against 2–3 comparable buildings in the same submarket.
4. Negotiate caps on controllable expenses, base-year tax protection, audit rights, and exclusions on capital items.
5. Get a single-line electrical drawing and confirm utility metering.
6. Quantify all concessions (free rent, TIA, cap savings) as a single net effective rent figure.

Once you have clean numbers, you can compare deals apples-to-apples. Browse current listings on WarehouseIndex for-lease inventory, filter by Brampton, Mississauga or Vaughan, and ask for the TMI breakdown before you sign anything.

Where to go next

Once you understand lease structures, the next step is matching rent to submarket. Our 2026 GTA submarket report compares rents and vacancy across Brampton, Milton, Mississauga, Vaughan and Pickering, and our Ontario warehouse leasing guide walks through the LOI-to-signed-lease process. To explore current inventory, start with WarehouseIndex's full listing feed.