A triple net lease, often written as NNN, is a commercial lease in which the tenant pays base rent plus its share of the property’s three main operating costs: property taxes, building insurance and maintenance. The landlord receives rent that is largely free of operating expenses.
Triple net leases are common for freestanding retail buildings, restaurants, industrial properties and multi-tenant shopping centers.
How it works
The tenant pays two things:
- Base rent, usually quoted per square foot per year
- Net charges, its share of taxes, insurance and common area maintenance, usually paid as monthly estimates and reconciled once a year
In a single-tenant building, the tenant may pay these costs directly. In a multi-tenant property, each tenant pays a pro rata share based on square footage.
There are related structures with fewer nets:
- Single net (N): tenant pays base rent plus property taxes
- Double net (NN): tenant pays base rent plus taxes and insurance
- Triple net (NNN): tenant pays base rent plus taxes, insurance and maintenance
Worked example
A hypothetical tenant leases 2,000 square feet of retail space at $24 per square foot in base rent, plus estimated NNN charges of $8 per square foot.
- Base rent: 2,000 x $24 = $48,000 a year
- NNN charges: 2,000 x $8 = $16,000 a year
- Total occupancy cost: $64,000 a year, or about $5,333 a month
If actual costs come in at $8.50 per square foot, the tenant owes an extra $1,000 at the annual reconciliation.
Why it matters for landlords
NNN leases shift most cost risk to the tenant, which creates predictable net operating income and can make the property more attractive to investors. The tradeoff is that tenants scrutinize charges closely, so you need clear definitions, good records and timely reconciliations. TenantLoop supports commercial leases with CAM, and our commercial lease guide compares NNN with gross and modified gross structures. Have an attorney review NNN lease terms before signing.
Related terms
Related questions.
What do the three nets stand for?
Property taxes, property insurance and maintenance, including common area maintenance. In a triple net lease, the tenant pays all three in addition to base rent.
What is an absolute net lease?
An absolute net lease, sometimes called a bondable lease, goes further than a typical NNN lease. The tenant takes on nearly all costs and risks, including major structural repairs and roof replacement.