What is a Triple Net (NNN) Lease?

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Definition of a Triple Net Lease

A triple net lease, often abbreviated as NNN lease, is a commercial real estate lease agreement where the tenant is responsible for paying all expenses associated with the property in addition to the rent. These expenses typically include property taxes, insurance, and maintenance costs, hence the term "triple net."

In a triple net lease, the landlord receives a fixed rental income while passing on the operational expenses to the tenant. This arrangement is common in commercial real estate, especially for properties such as retail centers, office buildings, and industrial warehouses.

Triple net leases are favored by landlords because they provide a predictable income stream and shift the burden of property expenses and risk to the tenant. Tenants, on the other hand, may find these leases advantageous if they want more control over the property's operation and maintenance. However, tenants need to carefully consider the potential variability and costs of these expenses when entering into such agreements.