What is a Triple Net (NNN) Commercial Lease?
A triple net (NNN) lease is a type of commercial real estate lease where the tenant is responsible for paying not only the base rent, but also their portion of the property's operating expenses, including property taxes, insurance, and maintenance costs. This type of lease is also referred to as a "net lease," as the tenant is responsible for paying all of the "nets" associated with the property's operation.
In a triple net lease, the tenant is typically responsible for paying the following expenses in addition to the base rent:
1. Property taxes: The tenant is responsible for paying a portion of the property's real estate taxes, based on the proportion of the property they occupy.
2. Insurance: The tenant is responsible for paying their portion of the building insurance. The tenant may be responsible for maintaining insurance coverage for the property, including liability insurance and property insurance. This may vary by property.
3. Maintenance: The tenant is responsible for their portion of maintenance and repair costs (also referred to as Common Area Maintenance - CAM) associated with the property. This can include everything from routine cleaning to major repairs and upgrades.
A tenant's portion is typically calculated as a percentage of the property they occupy. For instance, if a 10,000 square foot industrial building is shared by two tenants equally, each tenant's portion would be equal to 50%.
A second example may be a tenant with a 1,000 square foot office in a 10,000 square foot office building. In this instance, the landlord may consider the tenant's portion to be 10% plus a portion of the common area (hallways, restrooms, cafeteria, etc.).
There are several variations of triple net leases, including double net leases (where the tenant is responsible for property taxes and insurance) and absolute triple net leases (where the tenant is responsible for all expenses, including structural repairs).
As with any commercial lease, it's important to carefully review the terms of the lease to fully understand your financial obligations before signing.
If you're looking for a commercial real estate broker in eastern Massachusetts, specifically the Boston north area, contact Carbone Commercial Real Estate at 781-935-5444 or visit our webste at CarboneRE.com.
Article above is not intended to be legal advise or complete definition.