What Is A Triple Net Lease? (NNN)
Your business is growing, and you are seeking an office, retail or industrial space. You are looking for a commercial real estate agent and start to research what a space could potentially costs. As you look at various listings, you see terms such as triple net, double net, single net, but what does that mean?
A triple net lease is also known as triple-Net or NNN is a lease agreement between the property owner and the tenant leasing the space. The tenant or lessee promises to pay all the expenses of the property.
These expenses include:
- Real estate taxes
- Building insurance
These expenses are in addition to the rent and utilities of the space. A triple net lease on a commercial property tends to have a lower rent charge because the tenant is assuming more of the ongoing expenses for the property. They are advantageous for landlords because it provides low-risk steady income as owners. (1)
There are other types of leases including a single net and double net lease. A single net lease while not as common, requires the tenant to just pay the property taxes. And lastly, in a double net lease the tenant pays two instead of the three obligations, property taxes, and insurance premiums in addition to rent.
The landlord is responsible for all other operating expenses such as the roof, the structure, and sometimes the parking lot. If you are considering a NNN it is important to clarify the parking aspect upfront. A NNN gives the tenant nearly full control of the property as long as they comply with the use limitations and other clauses specified in the lease. (2)
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