What the Heck Does NNN Mean?

If you’re searching for Commercial Real Estate, whether it’s Office Space, Warehouse Space, Industrial Space or Retail Space you’re probably wondering what the heck NNN next to the listed rent means.

Wonder no more. In this post, we’ll demystify what the heck NNN means next to all those Office, Warehouse and Retail Space listings you’re seeing online.

What Does NNN Mean?

NNN stands for Triple Net rent. In this type of commercial real estate rent, you pay the amount listed and you also have pay additional costs (usually Operating Expenses) on top of that.

For example: say the Office Space listing you’re interested in says the rent is $24.00 NNN per sqft/year. The $24.00 number is your Base Rent. That’s the minimum amount that you pay in rent just to lease the space. In addition to Base Rent, you will pay have to pay additional money to cover the Operating Expenses (or NNN or Triple Net Expenses). The landlord will tell you the cost per square foot to cover the additional NNN expenses. These expenses vary from property to property, but they are usually lower than the quoted Base Rent.

You can learn more about the pros and cons of NNN here.

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What Do NNN Expenses Include?

The NNN expenses usually include your proportionate share of the exterior maintenance of the building, property insurance and property taxes. They are usually quoted on a per square foot basis.

Are There Any Other Expenses to Consider?

The short answer is, yes. In addition to paying your Triple Net Expenses you will be responsible for your own expenses to run your business out of the space. These expenses are electricity, water, gas, other utilities, internet service and janitorial service.

Because NNN rents are not very transparent, you should always ask the landlord or the commercial real estate agent representing the listing to tell you what the NNN charges are. Once you get that number, you can add them to the base rent and figure out what your total out of pocket monthly rent expense to lease the commercial space will be.

Using our example above, say the commercial real estate agent tells you the NNN charges/expenses are $6.00 per square foot, per year. Then to find out your total monthly rent, you will have to add the $24.00 base rent and add $6.00, then divide by 12 months, then multiply by the total square feet you will be leasing. So let’s say the space you’re renting is 3,000 square feet. Then do something like this:

(24+6 = 30) / 12
= $2.50
x 3,000
= $7,500 in rent per month

Commercial Real Estate Terminology

If you come across any commercial real estate lease terminology you are unfamiliar with, you can always visit our Glossary of Commercial Real Estate Terms to find out what they mean.

Need Help?

Digsy’s On-Demand Commercial Real Estate Experts not only help you save time finding the perfect space for your business, they also remove the stress by helping you understand rents, operating expenses and even negotiate with landlords on your behalf. You can learn more about using Digsy to find commercial real estate here.

 

If you have further questions, please leave them in the comments below and we’ll get back with you right away!

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Written by Andrew Bermudez

Andrew is the co-founder & CEO of Digsy, a free online platform that helps local business owners save time & money finding their dream office, retail & warehouse space. Before Digsy, Andrew was Senior Vice President & Principal of Lee & Associates Commercial Real Estate Services in Irvine, California. He's a 12 year commercial real estate brokerage veteran specializing in representing tenants, buyers and landlords.

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13 Comments

  1. Hello, I just found your webbsite and I am hoping you can help me.
    I do not understand the terms of the lease and was wondering if you can help me.

    I am thinking about leasing a property that is 1250 ft. with a triple net of 2.167 per sq. ft. per month the TI allowance is 20.00n per sq. ft. With annual rent increses of .50 per sq. ft. per year ? for the next 3-5 years

    This is my email and any information you can help me with I would greatly appreciate it.

    Thank you

    • Hi Marie, would love to help. Why don’t you give me a call 949.229.2476

      • Hi Andrew,

        I am a small business owner in East Tennessee. My partner and I are planning to move the business and recently received a NNN lease. We have only been in business one year but are in an odd situation in our Downtown area in which the landlord has threatened to move in a similar retailer to put us out of business if we don’t take the lease. (Said retailer has not been specified)
        We don’t think they are leaving room for negotiation and assume we won’t be able to relocate because of all the unknown costs.

        Would you be able to consult us or can you refer someone in TN? Does a broker have to be State Licensed?

        Thank you,
        Jen

  2. Thank you for this explanation of the NNN lease. I am an entrepreneur looking for space for a non-profit. This is my first venture into business and I was beginning to wonder if I was taking on too much. This article spelled out with clarity and examples all the information I had questioned and put my mind a bit more at ease. Thank you.

  3. Jessica Ybarra

    June 19, 2016 at 4:52 pm

    Hi I’m interested in opening a business and found a property that I want to lease but not sure what questions to ask or if it’s a good find. I believe the area is perfect but I need some guidance since this is my first time opening a business. I’m going into this blind and have a million questions. I would appreciate the help.

    Thanks!

  4. What;s your best advice for a land owner who wants to build-to-suit…. Wanting to get tenants prior to building, offering TI & 5 contracts.
    How do I find and secure tenants ?

  5. Thank you for this article, helps.
    I have a question. I Have an agreement and would like clairification to one part.

    Under conflicts of interest it states “each partner understands that the other partner may engage in other business activities which may compete directly or indirectly with the partnership. Each partner hereby consents to such other business activities and agrees that no partner shall acquire any interest there in by virtue of this partnership.”
    I am a partner in this. If I were to purchase a business that rents in the warehouse that the partnership owns, is this abiding by the last sentence or being a conflict of interest?

  6. Andrew I am considering terminating my lease early because we our downsizing the staff. My landlord is actually excited about this and has told me she would not charge us a penalty fee. We would like to consider renting a residential property because we only have 3-4 people in the office. Do you have any experience with this? It certainly would save me thousands!