A triple net lease, often abbreviated as NNN, is a type of commercial real estate lease in which the tenant is responsible for paying all property-related expenses in addition to the base rent. These expenses include property taxes, insurance, and maintenance, making the tenant the single payer for nearly all costs associated with the property during the lease term. This structure is distinct from other lease types where the landlord may retain responsibility for some or all these expenses.
Triple net leases are typically long-term agreements, often ranging from 10 to 20 years, and are commonly used for single-tenant properties such as retail, industrial, or office buildings. The lease terms usually include rental escalators, which can be fixed or tied to inflation indices like the Consumer Price Index (CPI), ensuring that rental income keeps pace with rising costs. This makes triple net leases an attractive option for both landlords and tenants, as landlords benefit from reduced management responsibilities and tenants gain long-term control over the property.
The triple net lease structure provides landlords with a highly predictable and stable cash flow, as their only responsibility is to collect rent, while tenants manage the operational aspects of the property. This arrangement is particularly appealing for investors seeking minimal management involvement and a passive investment approach. At the end of the lease term, tenants often have renewal options, but if they choose not to renew, the property reverts to the landlord, who can then re-lease it to a new tenant.