A triple net lease (NNN) is a form of commercial real estate lease agreement in which the tenant is responsible for all ongoing expenses related to the property.
What is a Triple Net Lease (NNN)?
A triple net lease (NNN) is a form of commercial real estate lease agreement in which the tenant is responsible for all ongoing expenses related to the property, including property taxes, insurance premiums, and common area maintenance (CAM). On other types of leases, these costs are generally split between the landlord and tenant.
The advantages of this structure range from allowing tenants more freedom to customize their space without interference from landlords to guaranteeing that landlords receive full payments each month regardless of any changes in maintenance costs or taxes.
This type of lease is a great option, as it can benefit both parties — tenants are incentivized to keep their premises well-maintained while still receiving a competitive market rate rent. Though there may be some upfront capital expenditure required by tenants when entering into such agreements, they will likely find them beneficial over time due to reduced operating expenses overall.
Triple Net Leases vs. Single Net Leases and Double Net Leases
With all of the leasing agreements on the market — from NNN and single net leases to double net leases — it’s easy to get confused when deciding which is right for you.
Single net leases require tenants to pay only the base rent, while double net leases require tenants to pay both the base rent and their share of property taxes. A triple net lease is more comprehensive, as it requires the tenants to cover all three of these costs plus any maintenance expenses that arise from common area usage. This type of lease is beneficial for you as the landlord because it provides a steady stream of income and alleviates many potential financial risks associated with ownership.
On the other hand, a triple net lease can be costly for tenants, especially if they’re already operating on tight budgets or don’t fully understand the implications of such an agreement.
In comparison, single and double net leases place more responsibility on landlords since they must absorb some portion (or all) of the operational costs associated with owning a commercial property. As a result, these types of arrangements may offer lower rental rates than triple-net agreements as well as greater flexibility in terms of how tenant improvements or upgrades can be handled. This structure may also provide additional protection against unexpected increases in taxes or other related expenses over time due to its cost-sharing benefits between landlord and tenant.
Ultimately, selecting which type of lease agreement is best for you depends largely upon each party’s individual needs and circumstances. However, there are advantages and disadvantages associated with each option that should be taken into consideration before making a final decision.
For landlords who are looking for secure income streams without taking on too much risk themselves, triple-net agreements might be ideal. Alternatively, if one party wishes to bear more responsibility than another then single or double-net leasing could make more sense, depending upon the situation at hand.
Get coverage in minutes
No hidden cancellation fees. Competitive rates nationwide.