what does NNN mean

In Leasing Property - Asked by Barbie H. - May 26, 2010
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Answer(s)

GEORGE R.
Broker/Agent
Rancho Cucamonga, CA

In a triple net lease, the tenant is responsible for all ongoing expenses, taxes, utilities, insurance payments, maintenance, and repairs. At the same time, the landlord collects monthly net rental income just as he or she would with a traditional real estate investment. In other words, a triple net lease allows the landlord to profit from leasing his or her property without any obligation to cover most of the real estate costs. (The landlord is only responsible for the roof and structure of the building, and occasionally parking.)

May 26, 2010
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Michael F.
Broker/Agent
Fort Lauderdale, FL

There are several different types of leases (e.g. "Full Service," "NNN (Triple Net)," "NN (Double Net)," and "Gross," to name a few. You will also find that different landlords define them in different ways. It's always best to ask "What else besides the quoted rent will the tenant have to pay to the landlord, and to third party providers?" That question will get you all of the expenses you'll have to pay.
Full Service leases typically include all of your costs other than sales tax, where applicable. That is, your rent includes the base rent that goes to the landlord, the real estate taxes, insurance, CAM/operating expenses, and electric service and janitorial for the common areas and tenant space. The rent is paid in one check, and typically escalates at a fixed percentage each year.
NNN leases typically consist of a base rent which is paid to the landlord, and then "additional rents" which consist of the real estate taxes, common area and building insurance, and CAM/operating expenses. Always ask if the NNN additional rents include electric and janitorial for the tenant's space or not. That is an additional cost you must take into account if it is not included, in order to compare buildings "apples to apples." The base rent generally increases at a fixed percentage each year, but the additional rents are estimated at the beginning of each year, and you get a credit or a bill for the difference when it is reconciled at the end of each year. In Florida, for example, after Hurricane Wilma had spawned not only tremendous damage, but an ensuing massive increase in property insurance rates, those in NNN leases were required to pay the increases in those insurance rates – in some instances 300 – 400 % increases! The type of lease you have can have a major impact on your future expenses and must be carefully considered.
NN leases are similar to NNN leases, but the landlord typically absorbs costs for repair or replacement of the roof, structure and foundation of the property. This is typically found in single tenant properties.
Gross leases are similar to full service leases, but tenants pay their own electric and janitorial for their space.
Again, these terms differ from owner to owner, and from market to market. It's best to have an experienced tenant rep broker assist you through the process.
There are many other areas where you can become confused comparing buildings, including the common area loss factor (one building may be far more efficiently built than another, so you are getting less actual, or "usable" space than you think you are), renewal and expansion rights, reasonable rental rates, tenant improvement allowances, exclusivity clauses, free rent, etc. The list goes on. An experienced broker will help you construct a reasonable offer on all of those terms, and others. They will save you time, aggravation, and money.

May 27, 2010
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Chris R.
Broker/Agent
Denton, TX

NNN - N = Taxes, N = Maintenance and N = Insurance. In a NNN Lease the tenant shares - proportionately to the whole of the SF of the property - in the costs of operating the center - N - N and N. So the base rent is enhanced by the landlord being able to recover the costs of Taxes / Maintenance / Insurance. In an ideal situation - 100% of the costs are recovered. Of course - that would mean the property is 100% leased for 365 days of the year and all tenants pay all of the rent that is due. Most often - NNN expenses are estimated and the tenant would pay 1/12th of the annual estimated NNN costs each month in addition to their base rent. This can vary from property to property / lease to lease / owner to owner / market to market. Could be quarterly / semi-annually or annually. Tenants would generally pay for individually metered utilities (could be one or all) or some would be provided to all and included in the CAM - common area maintenance figure. Landlords - and tenants alike - want to keep all such expenses as low as possible in order to be competitive in the market place but still maintain the property and the common elements in good professional manner.

May 30, 2010
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Brian D.
Broker/Agent
Beverly, MA

These are all very detailed and accurate responses. I have a comprehensive detail of all lease types people can review on my website. Feel free to copy-n-paste as the topis is public domain!
Brian Dapice
KW Commercial

May 31, 2010
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Jim G.
Broker/Agent
Sacramento, CA

NNN is short hand for triple net. From a tenant's point of view it means that in addition to the "base rent" you will be responsible for paying your prorated share of the taxes, insurance, and common area maintenance expenses.
From the landlord's perspective it means that the expenses associated with operating the property will be passed through and paid by the tenant.
There are numerous types of leases; and a NNN lease is a common on. The key to good landlord and tenant relationship is for the type of lease to be explained, well understood, with transparency and good reporting and management.
It is important when contrasting and comparing leases to compare apples with apples or NNN with NNN.

May 31, 2010
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Gavin B.
Broker/Agent
SURREY, BC

NNN means or stands for Triple Net Lease. What that means is, the Tenant, is responsible for all cost above their Lease Rate. This normally include Building Insurance, Maintance and Property Tax. The Tenant will pay a portion, depending on much square footage they have acquired from the Landlord.
If you would like more information in regards to Leasing and the different options available, please do not hesitate to contact me.

Jun 1, 2010
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Richard C.
Broker/Agent
Northfield, IL

These answers are excellent. What I would add is that there are differences in how the components are prorated. The numerator is the GLA (gross leasable area) of the tenant's space (there are also various ways of measurement, such as taking into account a percentage of the non-rentable space in the building - hallways, elevator shafts and the like), and the denominator can be total GLA in the center (or building) but sometimes is the GLA of only that portion that is rented, making the tenant effectively the landlord's partner in unsuccesful renting out.

Jun 5, 2010
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helen h.
Templeton, CA

What does NNN mean when leasing a commercial building?

May 13, 2012
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Gregory G.
Broker/Agent
San Francisco, CA

NNN stands for Net Net Net (the three major property related expenses in commercial real estate). They are property tax, insurance, and maintenance.
Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)225-9894
gregory.garver@gmail.com

Jun 30, 2012
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