what is nnn ?

In Leasing Property - Asked by young k. - Oct 20, 2010
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Answer(s)

Benjamin G.
Owner/Investor
Lawrence, NY

It means that the tenant is responsible for all costs (literally net net net).
Tenant pays all taxes, insurance, and maintenance.

Oct 20, 2010
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Andy F.
Broker/Agent
Dallas, TX

In a multi-tenant property, it also means that the tenant pays their pro-rata (proprtional) share of the three categories (property taxes, property insurance, and common area maintenance). If a tenant leased 1,000 square feet in a 10,000 square foot building, then their share of the NNNs would be 10%. The tenant usually pays the estimated amount monthly then the landlord reconciles it early in the following year. If tenant underpaid, they get a bill. Otherwise the overpayment gets applied to the following year's estimate.

Oct 20, 2010
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Bob M.
Half Moon Bay, CA

Both answers below are essentially correct. And the best approach when you hear the word Net or see single net, double net, triple net, industrial gross, or modified gross is to ask the listing agent or owner specifically what does the tenant pay for in addition to the rent. For example some people use NNN as described by Andy F, and while Ben's answer is very similar, there are nuances. For example in some NNN leases the maintenance of the roof, sidewalls and underground plumbing such as the sewer remain with the property owner and some put it on the tenant and often both are called NNN. So get very specific and take notes on what you are told! That way there will be fewer surprises. Learn to ask all the right questions when you list or present property to tenants or buyers. To learn more about commercial property, go to www.tdogs.com

Oct 22, 2010
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Marty H.
Broker/Agent
Lenexa, KS

It would help to know more about the context in which this question is asked. While NNN generally means that all the owner does is tell the tenant where to mail the rent check (tenant handles all other expenses and full maintenance), this term can mean something slightly different when applied to leasing space in a shopping center. For example, I've had agents tell me the rate for space in a shopping center was a NNN rate and later determined that the landlord actually took care of the building structure, including the roof. In a classic NNN situation this would not be the case.
Let us know what you are attempting to accomplish and we can do a better job of advising you.

Oct 22, 2010
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Neil T.
Broker/Agent
Sacramento, CA

The "NNN" term normally refers to maintenance, real estate taxes, and insurance.
In a pure single Tenant NNN lease the Tenant pays all expenses directly. The Landlord gets a rent check every month and doesn't have to deal with any expenses. In this situation the Tenant makes all the arrangements for maintenance, and pays the vendors directly. The Tenant also arranges for all insurance and pays the insures directly. The Tenant also pays the real estate taxes directly.
In a Shopping Center NNN setting here is how it is normally handled. The Tenant pays its pro rata share of all common area expenses including common area maintenance, real estate taxes and insurance. Landlords also include the cost of property management in the expenses and some Landlords charge an administrative fee on top of that. In this case the Landlord arranges for all the maintenance, insurance coverage, etc, and pays these expenses directly. The Tenant reimburses the landlord for these costs. The way most Landlords handle this is to come up with an estimate for expenses for a new year in the weeks or months before it begins. They then divide that number by 12 months and multiply it by the percentage of space the tenant occupies in the entire shopping center. Thus the Tenant pays a monthly pro rata share of the total shopping center expenses. After the year ends the Landlord should do a reconciliation. If the actual expenses for the year exceed what Tenants in the shopping center paid the Landlord, the Tenants are billed for their pro rata share of the amount the expenses exceeded their payments. If the amount the Tenants paid the Landlord exceed the actual expenses the Tenants are generally given a credit towards the expenses for the new year.

Oct 27, 2010
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