The short answer NNN, or triple net, means the tenant pays base rent plus its share of the property's three main operating costs: property taxes, building insurance and common area maintenance (CAM). A space quoted at "$14.00/SF NNN" costs more than $14.00 per square foot per year once those charges are added.
A 2,500 SF flex unit is quoted at $12.00/SF NNN, with estimated NNN charges of $4.80/SF per year.
Base rent: $12.00 × 2,500 ÷ 12 = $2,500.00 per month.
NNN charges: $4.80 × 2,500 ÷ 12 = $1,000.00 per month.
Total: ($12.00 + $4.80) × 2,500 ÷ 12 = $3,500.00 per month, before utilities.
What does each "N" cover?
- Taxes. Your share of the property tax bill on the land and building.
- Insurance. Your share of the landlord's property insurance on the building. Your own liability and contents coverage is separate.
- CAM. Your share of maintaining shared areas: parking lot, landscaping, snow removal, exterior lighting and usually a management fee. Your share is your pro rata share of the building.
How is NNN different from gross and modified gross?
| Cost | NNN (triple net) | Modified gross | Gross / full service |
|---|---|---|---|
| Base rent | Tenant | Tenant | Tenant |
| Property taxes | Tenant's share, on top of rent | Varies by lease; often in the rent, sometimes above a base year | Included in rent |
| Building insurance | Tenant's share, on top of rent | Varies by lease | Included in rent |
| Common area maintenance | Tenant's share, on top of rent | Varies by lease | Included in rent |
| Utilities and janitorial | Usually tenant | Often tenant | Often included |
| Who carries cost increases | Mostly tenant | Split, per the lease | Mostly landlord, often via a base-year clause |
"Modified gross" has no standard meaning. Read the expense section of the lease to see exactly which costs are in the rent and which are passed through.
Do NNN charges change during the lease?
Yes. The landlord bills an estimate each month, then reconciles to actual costs after year end. If taxes or snow removal ran higher than estimated, you get an invoice for your share. Base rent is fixed by the lease; NNN charges are not.
How this affects your lease
- Ask for the last two years of actual NNN charges, not just this year's estimate.
- Negotiate a cap on increases in controllable expenses (management, landscaping, snow removal). Taxes and insurance are usually excluded from caps.
- Ask whether capital items, like a roof replacement, can be passed through.
- Get the right to audit the reconciliation.
- Compare spaces on all-in monthly cost. Our guide to calculating commercial rent shows the math, including escalations.
Rates and NNN charges vary by property and change quarterly. Goff CRE Group, brokered by Nassar Realty, can pull current numbers for your size and use through our tenant representation service. For the full list of clauses to review, see the commercial lease checklist.
