Triple net — often written as “NNN” — is one of the most common commercial lease structures, particularly in retail and single-tenant properties. Understanding exactly what “net” means in this context is essential, since it fundamentally changes what a tenant is actually agreeing to pay beyond the quoted base rent.
What “Triple Net” Actually Means
In a triple net lease, the tenant pays base rent plus their proportional share of the three major categories of property expense:
- Property taxes
- Property insurance
- Common area maintenance (CAM), including repairs and upkeep of the building and common areas
This is distinct from a full-service gross lease, where these costs are bundled into a single rent figure the landlord is responsible for covering.
Why Landlords Prefer NNN Structures
A triple net structure shifts variable cost risk from the landlord to the tenant — if property taxes, insurance, or maintenance costs rise, the increase passes directly through to the tenant rather than eroding the landlord’s return. This is a significant reason NNN has become the dominant structure in much of retail and single-tenant commercial real estate.
Comparing Quoted Rent Across Lease Types
One of the most common mistakes tenants make when comparing spaces is comparing a NNN quoted rent directly against a gross lease quoted rent without accounting for the additional NNN charges — a lower NNN base rent can easily end up costing more overall once taxes, insurance, and CAM are added, compared to a higher quoted gross rent that already includes those costs.
What to Review Before Signing an NNN Lease
- Historical NNN charges for the property, not just projected or estimated figures, to understand the real total occupancy cost
- Whether a CAM cap applies, limiting how much CAM charges can increase year-over-year
- Audit rights, allowing the tenant to review the landlord’s actual expense documentation supporting the charges billed
- What’s included and excluded from each NNN category — capital improvements, for example, are sometimes improperly passed through as maintenance when they should be a landlord cost
Absolute Net and Ground Leases
Some leases go further than standard triple net, shifting essentially all property-related costs and even structural repair obligations to the tenant — sometimes called “absolute net” or “bondable” leases. These are more commonly seen in single-tenant, long-term leases (such as ground leases) and warrant particularly careful review given the scope of obligations assumed.
Negotiating Within an NNN Structure
Even within a triple net framework, tenants have room to negotiate — capping annual CAM increases, excluding capital expenditures from pass-through charges, securing audit rights, and negotiating insurance-related pass-through protections given current market conditions in Florida specifically.
Evaluating a triple net lease and want to understand your true occupancy cost? Brent A. Levison, P.A. has over 25 years of experience negotiating NNN leases for commercial tenants. Contact the firm today for a consultation.
The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.