What is a Triple Net Lease in Commercial Real Estate? - Rakow Group

What is a Triple Net Lease in Commercial Real Estate?

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What is a Triple Net Lease in Commercial Real Estate?

If you own a business and are in need of commercial property for rent, it can really pay off to learn about the different lease types that are available to you. The more you know, the more educated decisions you can make. Working with a great commercial real estate broker like the Rakow Group can go a long way towards helping you succeed in your commercial property for rent endeavors. We can help you step by step with all of your commercial real estate needs. Our extensive experience and professional approach to all of our client interactions can be hard to find with other commercial real estate brokers. One commercial real estate lease type to learn about is the triple net lease. It is also referred to as a NNN lease or a Net Net Net lease. We will provide a brief overview of triple net leases below and why they are important in the commercial real estate world.

A triple net lease typically requires the tenant to pay all of the operating expenses that are associated with maintaining the property that has been leased. This lease type is most commonly found in commercial real estate, particularly with single-tenant properties. Standard residential leases are typically gross leases, which means that the landlord will need to pay for all of the expenses related to the property. On the other hand, net leases mean that the tenant will pay for the operating expenses instead of the landlord.

There are three common operating expenses related to commercial real estate. They are insurance, common area maintenance, and property taxes. In a triple net lease, the tenant will be paying for all three. You might be wondering why a tenant would ever want to sign a triple-net lease? All of those expenses certainly can add up quickly for commercial property for rent. Well, the main benefit of a triple net lease is that the monthly rent cost will typically be much lower than normal gross leases. If the building is fairly new and you don’t anticipate lots of operating expenses like repairs, it might make the most sense financially to sign a triple net lease. However, if the building is an older structure, the costs can become quite the burden. For example, imagine having to foot the bill for a renovation on an older building.

We hope this article has provided you with some valuable information about triple net leases and why they might be a good opportunity for you.

Rakow

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