A common commercial real estate lease structure, often abbreviated as NNN, necessitates that the tenant pay a base rent amount to the landlord, in addition to being responsible for property taxes, insurance, and maintenance costs associated with the leased premises. The method used to arrive at the total cost involves calculating the base rent and adding the estimated expenses related to those three categories.
This lease structure benefits landlords by reducing their financial and administrative burdens, as tenants directly manage and pay for property-related expenses. For tenants, the structure can offer potentially lower base rents compared to gross leases where the landlord incorporates these costs. Historically, this arrangement has been popular in single-tenant properties and is gaining traction in multi-tenant settings where expense allocation is carefully defined.