Triple Net (NNN) Lease Explained: What Tenants Actually Pay Beyond Rent
February 26, 2026
The Three "Nets" in Triple Net
A triple net (NNN) lease requires the tenant to pay three categories of expenses on top of base rent — hence "triple net." The three nets are:
- Property Taxes: The tenant pays their pro-rata share of real estate taxes on the property
- Property Insurance: The tenant pays their share of the landlord's building insurance premiums
- Maintenance (CAM): The tenant pays for common area maintenance and often building structural maintenance
In a true NNN lease, the landlord receives "net net net" — base rent only, with all operating costs passed to tenants. The landlord's economics are predictable; the tenant bears the operating cost risk.
NNN vs. Modified Gross vs. Gross Leases
| Lease Type | Who Pays Operating Costs | Base Rent |
|---|---|---|
| Gross (Full Service) | Landlord pays everything | Higher (costs included) |
| Modified Gross | Split — varies by negotiation | Middle range |
| Net (N) | Tenant pays one net (usually taxes) | Lower |
| Double Net (NN) | Tenant pays taxes + insurance | Lower |
| Triple Net (NNN) | Tenant pays all three | Lowest base |
Calculating True NNN Occupancy Cost
The critical mistake NNN tenants make: comparing base rents without accounting for net charges. A $20/SF NNN lease in a well-run building might cost $28/SF in total occupancy. A $24/SF modified gross lease in the same market might cost $26/SF all-in.
To calculate true NNN occupancy cost:
Base rent per SF: $20.00 + Property taxes per SF: $3.50 + Insurance per SF: $0.75 + CAM per SF: $4.00 = Total occupancy cost per SF: $28.25
Always ask the landlord for the prior year's actual NNN expense history and the current year's estimate. This should be disclosed before lease signing — if a landlord refuses to provide it, walk away.
What NNN Expenses Can Vary Significantly
Property Taxes
Taxes are relatively predictable year-to-year but can jump significantly after a property sale (property is reassessed at the new purchase price) or local tax increase. Ask about the current assessed value and any pending reassessments.
Insurance
Insurance premiums have risen dramatically since 2021, particularly for properties in coastal or wildfire-prone areas. A 40% insurance premium increase can add $0.50–$2.00/SF to your NNN costs.
Maintenance
Highly variable based on building age, quality, and what the landlord includes. In some NNN leases, tenants are responsible for roof and structure — major capital costs that should be negotiated to have a landlord cap or exclusion.
Key NNN Negotiation Points
- Expense cap: Limit annual CAM/operating expense increases to 3–5% (controllable expenses only)
- Roof and structure exclusion: Push to exclude major structural repairs from tenant responsibility
- Audit rights: Right to audit landlord's expense records annually, within 12 months of receiving the reconciliation
- Property tax appeal rights: Right (or obligation) to participate in property tax appeals that could reduce your share
- Capital expenditure exclusion: Roof replacement, HVAC replacement — amortize or exclude from NNN charges
Extract NNN Lease Terms Automatically
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