If you’re new to commercial real estate, you’ve probably heard the term NNN lease, or triple net lease, but what does it actually mean?
A NNN lease is a type of commercial real estate lease in which the tenant typically pays the base rent plus certain property-related expenses. The three “nets” generally refer to property taxes, property insurance, and maintenance expenses.
What Does a Tenant Pay Under a NNN Lease?
In a typical NNN lease, the tenant pays:
- Base rent
- Property taxes
- Property insurance
- Common area maintenance (CAM) and other applicable operating expenses
The specific expenses and responsibilities can vary depending on the terms of the lease, so it is important for both tenants and property owners to understand exactly what is included before signing an agreement.
Why Does a NNN Lease Matter?
For property owners, a NNN lease can provide a more predictable net income structure because many property-related operating expenses are passed through to the tenant.
For tenants, a NNN lease may offer a lower base rent compared with some other lease structures, but it also means taking on additional responsibility for property expenses.
Understanding the lease structure upfront can help prevent surprises later in the leasing process. If your lease is approaching expiration, it’s also important to start planning your commercial lease renewal well in advance.
Have Questions About Commercial Real Estate?
Whether you’re evaluating a commercial property, considering a lease, or simply want to better understand commercial real estate, Hayden Ingram can help.
Contact Hayden to learn more about commercial real estate leasing opportunities and how different lease structures may affect your business.
985-801-9028 (cell)
