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You are here: Home / Blog Posts / Commercial Real Estate Leasing 101: What is a NNN or triple net lease?

Commercial Real Estate Leasing 101: What is a NNN or triple net lease?

By Catherine

NNN? Triple Net? Commercial Leasing?
NNN? Triple Net? Commercial Leasing?

When dealing with commercial real estate, we are often asked what does NNN mean?  To help shed a little light on this question, I’ve given a brief overview of what NNN means and how they pertain to a tenant in the leasing of commercial real estate.  This information does come with a caveat:  ALL LEASES ARE DIFFERENT.  We strongly recommend consulting with the appropriate professionals (attorney, CPA, etc.) prior to signing any commercial lease agreement.  I am a principal real estate broker licensed to conduct professional real estate activity.  I am not an attorney or CPA and even after many nights in a Holiday Inn, I still cannot convince the licensing authorities to allow me to practice law or accounting:)  And we’re off!

“NNN’s” (triple nets) are also called CAM’s (common area maintenance fees).   These typically refer to costs incurred by the landlord for owning and operating the building.  Generally, these costs are property taxes, insurance, exterior building maintenance, and common area maintenance (landscaping, shared bathrooms, parking lots, common hallways, etc.)  The common area maintenance and what is included as common area, varies by property.  The reason you see NNN’s expressed on a per foot basis is because tenants are only responsible for their pro-rata share of the owner’s expenses.  The NNN’s are always estimated due to potential fluctuations in owner expenses.  Many leases require the landlord to reconcile the expenses annually and provide accounting of the expenses to the tenant.  Most leases have provisions for reconciling the amount paid by the tenant and actual landlord incurred expenses, in the event the annual NNN amount paid by the tenant varies from the actual expenses incurred by the owner.  Two other items are important to note when looking at NNN leases:  1.)  The NNN expenses can vary greatly from property to property and 2.) In a true NNN lease, the tenant is still responsible for all of the tenant’s utilities (i.e. power, water, sewer, natural gas, etc.)

This should help explain the mystery of NNN’s.  As with any topics discussed on our site, please don’t hesitate to contact us.  We’re here to help.

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Filed Under: Blog Posts Tagged With: commercial real estate, commercial real estate leases, lease, NNN lease, triple net lease

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