What is a Triple Net (NNN) Lease?
What is a Triple Net (NNN) Lease?
A triple net lease, often abbreviated as NNN lease, is a type of real estate lease agreement where the tenant is responsible for paying all operating expenses associated with a property. This includes three major expense categories, hence the term "triple net":
- Real estate taxes: The tenant is responsible for paying the property taxes associated with the leased space.
- Building insurance: The tenant must cover insurance for the building.
- Maintenance costs: This involves the cost of repairs and maintenance of common areas and essential systems (like HVAC), and can also include utilities and janitorial services.
In a triple net lease, the landlord typically has very few financial obligations related to the property, making it a preferred option for many commercial property investors. The tenant’s expenses are predictable and transparent, but they assume more financial risk compared to other lease types, such as gross leases, where the landlord absorbs most of the operational costs. Triple net leases are commonly used in commercial real estate, especially for retail spaces, office buildings, and industrial properties.