What a triple-net (NNN) lease is
“Net” means the rent is net of an expense the tenant pays separately. A single-net lease passes through property taxes; a double-net lease adds insurance; a triple-net lease adds maintenance and common-area costs — the tenant reimburses its pro-rata share of all three on top of base rent, usually as a monthly estimate that is reconciled against actual costs once a year. Tenants in NNN leases also typically pay their own utilities, janitorial, and interior repairs. NNN is the default structure for retail centers, industrial and warehouse space, and single-tenant buildings.
An absolute NNN (or “bond”) lease goes further: the tenant is responsible for everything, including roof and structure, and rent continues regardless of the building's condition. These are common in single-tenant net-lease properties occupied by national chains — the “NNN properties for sale” investors search for.
What a gross lease is
A gross lease quotes one rent number and the landlord pays the operating expenses out of it. Most office gross leases are full-service gross — janitorial and business-hours utilities included — with a base-year clause: the landlord absorbs expenses up to their first-year level and the tenant pays its share of increases above that. A modified gross lease is a negotiated hybrid where the tenant takes back some costs, usually utilities and janitorial. See the dedicated guides on full-service gross leases and modified gross leases.
NNN vs. gross, side by side
| Triple-net (NNN) | Gross (full-service) | |
|---|---|---|
| Base rent | Lower | Higher |
| Taxes, insurance, CAM | Tenant's pro-rata share, billed monthly and reconciled annually | Landlord; tenant pays only increases over the base year (if the lease has one) |
| Utilities & janitorial | Tenant | Landlord (business hours) |
| Who bears cost increases | Tenant | Landlord, except base-year increases |
| Transparency | High — tenant sees every building cost | Low — costs are inside the rent |
| Budget certainty | Lower — true-ups can surprise | Higher |
| Typical property types | Retail, industrial, single-tenant, medical | Multi-tenant office |
A cost example: same space, two structures
Take a 1,500-square-foot retail suite. Quote A is $2.50 per square foot per month NNN with current NNN charges estimated at $0.85: base rent $3,750 plus $1,275 in nets, or $5,025 a month, plus the tenant's own utilities and cleaning. Quote B is $3.35 gross: $5,025 a month with taxes, insurance, and CAM inside the rent, plus the tenant's utilities and cleaning. Identical in year one. The difference shows up in year three when property taxes are reassessed or the parking lot is resurfaced: under Quote A the tenant's nets rise to, say, $1.00 and its cost climbs to $5,250; under Quote B the landlord absorbs most of it. NNN tenants trade budget certainty for a lower starting rent and full visibility into what they are paying for.
NNN vs. CAM: not the same thing
CAM (common-area maintenance) is one of the three nets — the landscaping, parking-lot, lighting, security, and management costs of shared areas. NNN is the whole package: CAM plus property taxes plus insurance. A listing that says “$2.50 plus CAM” may or may not also pass through taxes and insurance; ask for the full operating-expense estimate per square foot and what it includes.
Which should you choose?
- Tenants who want predictability (professional services, small offices, first-time commercial tenants) usually prefer gross or modified gross — one number, no reconciliation letters.
- Tenants who want the lowest base rent and transparency, or who use a lot of the building (retail, industrial, high-traffic uses), are usually in NNN leases because that is what the market offers for those property types.
- Landlords favor NNN because it transfers expense risk and makes the income stream easier to underwrite — which is why investors price NNN-leased buildings on their net operating income and the credit of the tenant. If you are evaluating a net-leased property for sale, the cap-rate guide covers how that income is valued.
In every case, negotiate the terms that matter more than the label: caps on controllable expenses, exclusions for capital items, audit rights, the base year (in gross leases), escalations, and any personal guarantee.
California notes
California does not regulate commercial rent or lease structure — the lease controls. Two things do apply: since January 1, 2025 (SB 1103), qualified commercial tenants (microenterprises with five or fewer employees, restaurants with fewer than ten, nonprofits with fewer than twenty, who notify the landlord in writing) are entitled to proportionate, documented building-cost pass-throughs and can request the backup — directly relevant to NNN reconciliations; and every commercial lease must disclose whether the premises have had a Certified Access Specialist (CASp) inspection (Civil Code §1938). Have a commercial-experienced attorney review any lease longer than a year.