Triple net (NNN)
Tenant pays base rent plus its share of taxes, insurance and maintenance.
Commercial real estate basics
Commercial leases, decoded.
Triple net, gross, CAM, escalations: what the terms mean and why they matter to both landlords and tenants.
Why lease structure matters
In commercial real estate, the lease is the asset. Two buildings with the same rent can have very different values depending on who pays for taxes, insurance and maintenance, and how rents grow.
Understanding the basics helps owners and tenants negotiate fair deals and avoid surprises.
Key terms
Gross lease
Tenant pays one rent; the landlord covers most operating costs.
Modified gross
A middle ground where certain costs are shared or passed through.
CAM charges
Common area maintenance: tenants' share of costs like cleaning, landscaping and parking lots.
Escalations
Scheduled rent increases, often fixed percentages or tied to an index.
Term & options
Lease length plus any rights to renew, expand or terminate.
Define every pass-through
Spell out exactly which expenses are included in CAM, how they are calculated, whether there are caps, and how reconciliations work at year-end.
Match the term to the business
Longer terms give landlords stability and tenants security, especially when the tenant is investing in build-out. Renewal options add flexibility.
Get insurance and use clauses right
Certificates of insurance, permitted uses, exclusives and signage rights cause many disputes when they are vague. Precision up front saves time later.
Frequently asked questions
What is a triple net lease?
A lease where the tenant pays base rent plus its share of property taxes, insurance and maintenance costs, often called the three nets.
What are CAM charges?
Common area maintenance charges are tenants' proportional share of operating costs for shared areas, such as cleaning, snow removal, lighting and parking lot upkeep.
What is the difference between gross and net leases?
In a gross lease the landlord pays most operating expenses out of the rent; in a net lease some or all of those expenses are passed through to the tenant.
Why do landlords require certificates of insurance?
To confirm tenants carry required liability and property coverage, protecting both the tenant and the property owner.
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