Overview of Triple Net Leases

Commercial real estate leases do not follow a universal template, making it crucial to understand the specific terms of anyagreement. One widely used lease structure is the triple net lease (NNN), which requires tenants to assume responsibility for three key expenses:

key expenses:

• Property Taxes
• Insurance
• Common Area Maintenance (CAM)

NNN leases are common in retail centers, medical office buildings, hospital campuses, and traditional office properties. In addition to base rent, tenants must cover various operational costs, including maintenance, landscaping, security, and more. Depending on the property, utilities and janitorial services may also fall under CAM expenses.

Benefits of NNN Leases:

• Lower Base Rent – Since tenants cover operational costs, landlords typically offer reduced base rental rates.
• Predictable Expenses – Tenants have a clear understanding of financial responsibilities upfront.
• Tenants with strong credit and good financials, can leverage their position during lease negotiations.

Obligations and risks of NNN Leases:

• Tenants must be prepared for unexpected costs related to property maintenance or repairs.

Successfully navigating a triple net lease requires industry expertise and strategic planning. Leveraging an experienced tenant representative ensures fair lease terms, mitigates financial risks, and helps optimize site selection. They also educate tenants on key negotiation levers, such as capping controllable operating expenses, auditing landlord charges, and securing favorable renewal terms. Professional guidance safeguards your practice from unnecessary liabilities and unexpected expenses, ensuring you achieve the most advantageous lease terms possible.