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.
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
= $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.
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!