If you’ve ever looked at a commercial listing and seen “NNN” next to the rent, you’re not alone if your first question was: What does that actually mean for my monthly cost?
Triple Net (NNN) charges are one of the most misunderstood parts of commercial leasing, especially for small and mid-sized business owners. They’re also one of the biggest reasons tenants are surprised by their total rent after they move in.
Here’s what NNN charges are, what they typically include, and what you should understand before signing a lease.
What Does “Triple Net” Mean?
A triple net lease means that, in addition to base rent, the tenant pays for three operating expenses tied to the property:
Property taxes
Property insurance
Common area maintenance (CAM)
Instead of the landlord bundling these costs into the rent, they are passed through to the tenant based on their share of the building.
That’s why NNN rent often looks cheaper at first glance — the operating costs are listed separately.
What’s Included in NNN Charges?
While the structure is consistent, the actual costs can vary by property.
1. Property Taxes
This is the tenant’s proportional share of real estate taxes assessed on the building. These can fluctuate year to year depending on reassessments or tax rate changes.
This is one reason NNN charges aren’t always a fixed number.
2. Property Insurance
This covers insurance on the building itself (not your business contents or liability). If insurance premiums increase, that increase is typically passed through to tenants.
3. Common Area Maintenance (CAM)
CAM charges cover shared spaces and systems, which may include:
Parking lots
Landscaping
Exterior lighting
Snow removal (where applicable)
Common hallways or restrooms
Property management and maintenance
CAM is usually the most variable part of NNN charges and the one that deserves the closest review.
How Are NNN Charges Calculated?
NNN charges are usually calculated per square foot and allocated based on the tenant’s share of the total building.
For example:
If a building has 20,000 SF
You lease 2,000 SF
You’re responsible for 10% of the NNN expenses
Those costs are typically estimated annually and broken into monthly payments.
At the end of the year, there’s often a reconciliation to account for actual expenses versus estimates.
Are NNN Charges the Same Every Year?
No — and this is important.
NNN charges can increase due to:
rising property taxes
insurance premium increases
higher maintenance or repair costs
Some leases include caps on certain CAM increases, while others don’t. This is where lease terms matter just as much as the number itself.
What’s a “Normal” NNN Rate?
NNN charges vary widely by:
property type (office, retail, industrial)
age and condition of the building
location
how the property is managed
As a rough general range:
Office: $3–6/SF
Retail: $4–8/SF
Industrial: $2–5/SF
These are not guarantees — just typical ranges. The only number that matters is what applies to that specific property.
Why NNN Charges Matter More Than Base Rent
Two spaces with the same base rent can have very different total monthly costs once NNN charges are added.
That’s why focusing only on the advertised rent often leads to budget surprises later.
Understanding the all-in cost is far more important than chasing the lowest number on paper.
Questions Business Owners Should Ask About NNN Charges
Before signing a lease, you should know:
What expenses are included in CAM?
Are there caps on CAM increases?
How often are charges reconciled?
Are major capital repairs passed through to tenants?
Can you review prior years’ NNN statements?
Clear answers here prevent problems later.
The Bottom Line
Triple Net charges aren’t a trick — but they can feel like one if they aren’t clearly explained upfront.
A good commercial lease makes NNN costs transparent, predictable, and easy to understand. If you don’t fully understand how they’re calculated, you’re not ready to sign yet.
You’re in business to grow.
Your lease should support that — not surprise you.
Triple Net (NNN) Lease FAQs
What does NNN mean in commercial real estate?
NNN stands for triple net, which means the tenant pays their share of property taxes, property insurance, and common area maintenance (CAM) in addition to base rent. These costs are not included in the advertised rent.
Are NNN charges paid monthly or annually?
NNN charges are typically estimated annually and paid monthly along with rent. At the end of the year, the landlord reconciles the estimate against actual expenses and issues either a credit or a balance due.
Can NNN charges increase over time?
Yes. NNN charges can increase due to higher property taxes, rising insurance premiums, or increased maintenance costs. Some leases include caps on CAM increases, but not all do.
Are utilities included in NNN charges?
Usually, no. Utilities for your individual space (electric, water, gas, internet) are typically billed separately. NNN charges cover shared property expenses, not your business’s utility usage.
Do NNN charges include major repairs or capital expenses?
It depends on the lease. Some leases allow certain capital expenses to be passed through to tenants, while others exclude them. This is an important section to review carefully before signing.
How can I verify if NNN charges are reasonable?
You can ask for prior years’ NNN statements to see historical costs, review what’s included in CAM, and compare the rate to similar properties. Transparency here is a good indicator of how the property is managed.
Is NNN rent cheaper than gross rent?
NNN rent often looks cheaper on paper, but that’s because operating expenses are listed separately. What matters is the total monthly cost, not just the base rent.
Are NNN leases bad for tenants?
Not inherently. NNN leases are common and can be fair when expenses are transparent and the property is well maintained. Problems arise when costs aren’t clearly explained upfront.
Can NNN charges be negotiated?
Sometimes. While taxes and insurance are usually fixed, aspects of CAM, caps on increases, or exclusions for certain expenses may be negotiable depending on the property and market conditions.
What’s the biggest mistake tenants make with NNN leases?
Focusing only on base rent and not understanding the all-in cost. NNN charges can significantly impact your monthly budget if they’re overlooked.
