February 25, 2019

What is a Triple Net Lease in Commercial Real Estate?

If you own a business and are thinking about leasing small office spaces, it can really pay off to learn about the different lease types that are available to you. The more you know, the more informed decision you can make. Working with a great commercial real estate broker like the RakowGroup can go a long way towards helping you succeed in your commercial property search. We can help you step by step with all of your commercial real estate needs.

One commercial real estate lease type worth learning about is the triple net lease. It is also referred to as a NNN lease or a Net Net Net lease.

Why is a Triple Net Lease Important in Commercial Real Estate?

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

Three Common Operating Expenses in a Triple Net Lease

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 as all of those expenses certainly can add up quickly for businesses in search of commercial office space.

What are the Benefits of a Triple Net Lease in Commercial Real Estate?

The main benefit of a triple net lease is that the monthly rent cost of the commercial space 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.

Determining whether a Triple Net Lease is right for your Business

There are always pros and cons to consider when looking into leasing industrial space or finding small office spaces. With RakowGroup’s 30+ plus years of commercial realty experience, we will work with you to identify you and your businesses unique needs. Contact RakowGroup for premier commercial realty representation.