Everything tenants, landlords, and investors need to know about triple net leases - with real numbers and negotiation levers.
A triple net (NNN) lease is a commercial lease structure where the tenant pays base rent PLUS the three 'nets' - property taxes, building insurance, and common area maintenance (CAM). NNN is the dominant lease structure in retail and single-tenant net-lease investment properties. This guide walks through exactly how NNN works, how it differs from gross and modified gross leases, how CAM is calculated and audited, and the specific clauses tenants should negotiate before signing.
NNN stands for the three 'nets' the tenant pays in addition to base rent: (1) real estate taxes, (2) property insurance, and (3) CAM - common area maintenance. The landlord's role in a true NNN lease is limited to owning the property, financing it, and (usually) roof and structure. Every other operating cost flows through to the tenant.
You will also see the shorthand 'N,' 'NN,' 'NNN,' and 'absolute NNN.' Each adds another cost category to the tenant's side of the ledger.
| Lease Type | Tenant Pays | Landlord Pays |
|---|---|---|
| Gross (Full-Service) | Base rent only | Taxes, insurance, CAM, utilities |
| Modified Gross | Base rent + some pass-throughs | Most operating costs |
| N (Single Net) | Base + taxes | Insurance, CAM, structure |
| NN (Double Net) | Base + taxes + insurance | CAM, roof, structure |
| NNN (Triple Net) | Base + taxes + insurance + CAM | Roof and structure |
| Absolute NNN | Everything, including roof/structure | Nothing |
NNN charges are quoted per square foot per year, just like base rent. If a Southlake storefront lists at '$48 PSF NNN + $14 NNN,' the tenant pays $48 in base rent and $14 in pass-throughs - a total occupancy cost of $62 PSF annually, or $5.17 PSF monthly.
The landlord estimates NNN at the start of each calendar year, bills the tenant monthly, then reconciles actual expenses against estimates after year-end. Overages are billed to the tenant; underages are credited back.
Example: a 2,000 SF Southlake retail space at $48 base + $14 NNN = $62 PSF × 2,000 = $124,000/yr, or $10,333/mo total rent.
NNN transfers operating risk to the tenant. That's great for landlords and net-lease investors - income is predictable and inflation-protected. It's less friendly to tenants because operating costs can rise faster than base rent (taxes reassess after a sale, insurance is at multi-decade highs, and CAM includes discretionary items).
Well-negotiated NNN caps and exclusions can neutralize 60–80% of that downside for tenants without breaking the deal for the landlord.
Daniel Weber offers free, no-obligation strategy conversations for tenants, landlords, and investors across Southlake and DFW.