The triple net lease – one type of commercial lease – does have its advantages for a landlord/investor, and could potentially benefit the tenant too depending on their situation. Some argue this type of lease is ideal for landlords, as it’s a reliable source of income, yet doesn’t carry many overhead costs. In other words, it’s a low-risk, steady income-based commercial lease. With this arrangement, the property owner doesn’t usually play an active role in the management of the property. In addition to the base rent amount plus utilities, the tenant is responsible for covering the real estate taxes (N), the property insurance (N) and maintenance costs (N).
This rental amount is usually lower than other non-NNN leases in the market, because the tenant is taking on the brunt of responsibility with the property’s ongoing expenses. Obviously, there’s room for negotiation on the part of the leasee, since the tenant is assuming most of the risk on behalf of the landlord. Certain repair costs or utilities might be covered by the property owner in triple net leases. They might also be responsible for the structure itself, including the roof, and sometimes the parking lot. There’s variation in each NNN commercial lease.
For the tenant, NNN leases can allow for greater flexibility. They can customize their space onsite and have more liberty with the structure of the lease.