A triple net lease (NNN) is a commercial lease in which the tenant pays base rent plus its share of the three "nets": property taxes, building insurance, and common area maintenance. The landlord receives rent largely free of operating cost. Single and double net leases pass through fewer categories; an absolute net lease passes through everything, including structure and roof.
The net in net lease describes what the landlord receives: rent net of the property's operating costs. In a triple net lease three categories of cost pass to the tenant. The summaries at Wikipedia's NNN lease entry and Cornell's Legal Information Institute describe the structure; the lease itself decides the details.
The spectrum
| Lease type | Tenant pays beyond base rent |
|---|---|
| Gross lease | Nothing; landlord pays operating costs from rent |
| Modified gross | Some categories, often utilities and janitorial, or costs above a base year |
| Single net (N) | Property taxes |
| Double net (NN) | Property taxes and insurance |
| Triple net (NNN) | Taxes, insurance, and common area maintenance |
| Absolute net | Everything, including roof and structure |
The gross lease and modified gross lease entries cover the other end of the spectrum.
Why it matters for operations
A NNN lease turns the landlord's operating costs into the tenant's additional rent, which creates the annual CAM reconciliation and the disputes around it. Each tenant's pro rata share, exclusions, caps, and base year are lease-specific fields that lease administration has to hold accurately, because the recovery statement is only as good as the abstract. Retail centres and industrial parks run almost entirely on NNN structures; office markets mix NNN with modified gross and base year leases.
Reading a NNN clause
Look for the definition of operating expenses and its exclusion list, the tenant's share and how the denominator is measured, caps on controllable costs, gross-up language, the reconciliation deadline, and the audit right. Those six items decide the tenant's real occupancy cost far more than the label on the lease.
Related terms
Frequently asked questions
What does the tenant pay under a triple net lease?
Base rent, plus a pro rata share of property taxes, property insurance, and common area maintenance, usually as monthly estimates reconciled after year end. The tenant also pays its own utilities, interior maintenance, and insurance. The lease's expense definitions and exclusions decide the exact scope.
What is the difference between single, double, and triple net?
Single net (N) passes through property taxes only. Double net (NN) adds insurance. Triple net (NNN) adds common area maintenance. The labels are shorthand; the actual allocation is whatever the lease says, which is why lease administration reads the clause rather than the name.
What is an absolute net lease?
A lease where the tenant bears every cost of the property, including roof, structure, and capital replacements, leaving the landlord with no obligations beyond collecting rent. Common in single-tenant retail and industrial deals with investment-grade tenants, and often what people mean by a bondable lease.
Who bears the risk of rising costs in a NNN lease?
The tenant, subject to any caps the lease grants on controllable expenses. A tax reassessment or an insurance premium spike flows through to the tenant. That is the trade the tenant makes for lower base rent, and the reason tenants negotiate exclusions, caps, and audit rights.