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.
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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March 15, 2016 at 12:32 pm
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
March 17, 2016 at 12:27 pm
Hi Marie, would love to help. Why don’t you give me a call 949.229.2476
August 25, 2016 at 7:56 am
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
August 29, 2016 at 2:40 pm
Hello Jen,
Thank you so much for reaching out.
Depending on your needs, we can definitely try an help. We have a few people in that market.
Can you send us an email addressing my name in the subject line to: contact@getdigsy.com ?
April 25, 2016 at 10:47 am
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.
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!
August 29, 2016 at 2:45 pm
Hi Jessica,
We could help, depending on the area you are in.
Email me at contact@getdigsy.com
June 20, 2016 at 9:15 pm
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 ?
August 29, 2016 at 2:45 pm
Hi James,
You can actually network with local real estate agents and also list the property on multiple listing services as “Build to Suit Opportunity”.
I’m happy to provide more assistance. Just email me at contact@getdigsy.com
July 30, 2016 at 4:34 pm
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?
August 29, 2016 at 2:43 pm
Hi Dale,
Unfortunately, real estate law prohibits agents from giving legal advice.
When it comes to legal, you should consult a real estate attorney.
If you don’t know one, I’m happy to refer one to you.
You can email me at contact@getdigsy.com
August 2, 2016 at 7:54 am
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!
August 29, 2016 at 2:42 pm
Hi C. Jordan,
I do, however, many cities restrict businesses from operating out of residential properties due to zoning restrictions.
Feel free to reach me at: contact@getdigsy.com and we can chat more.
June 25, 2018 at 11:36 am
When you sign a Triple net lease does it free the owner of the building of all liability? We leased a building which says it is a triple net lease. The owner failed to disclose that the building had plumbing problems for years prior to us leasing the building. They way we found out was we contacted the City to find out if the sewer was damage on the Cities side, but the City worker said that it had been reported for years even from the previous tenant. The Landlord said he is not responsible, because it is a Triple Net lease. Is this true?