Triple Net (NNN) vs. Gross Leases

When you receive a commercial lease proposal, the first thing you look at is likely the "Base Rent." But in commercial real estate, the base rent is often just the tip of the iceberg. The structure of the lease determines your actual monthly payout.

What is a Gross Lease?

A Gross Lease (or Full Service Lease) is the simplest for tenants. You pay a single flat fee per month, and the landlord covers:

Property Taxes
Building Insurance
Maintenance & Repairs (CAM)
Utilities (sometimes)

Is it good for you? Yes. Ideally, this is what you want. It provides predictable monthly expenses.

What is a Triple Net (NNN) Lease?

A Triple Net (NNN) lease is the landlord's favorite. You pay a lower "Base Rent," but you ALSO pay your pro-rata share of:

Net Property Taxes
Net Building Insurance
Net Common Area Maintenance (CAM)

The Trap: Landlords often advertise a low base rent (e.g., "$15/sqft") to lure you in. But once you add the "NNN" charges (which can fluctuate wildly), your effective rent might be $25/sqft. Even worse, if the roof leaks or property taxes spike, you get the bill, not the landlord.

How to Protect Yourself

If you must sign an NNN lease (and many retail spaces require it), you need to negotiate:

CAM Caps: Limit how much the operating expenses can increase each year (e.g., max 5%).
Capital Expenditure Exclusions: Ensure you aren't paying for the landlord's new roof or HVAC system replacement.

BizLeaseCheck automatically scans your lease to identify if it's NNN or Gross, and flags dangerous unlimited expense clauses.