A triple net lease — NNN — is a lease structure where the tenant pays base rent plus the three main property expense categories: property taxes, insurance, and maintenance. It's one of three common lease structures, and the differences between them materially affect what a tenant actually pays.
The three common lease structures
Full-service (also called gross). Tenant pays base rent only. The landlord covers all operating expenses, property taxes, insurance, and maintenance out of the rent. Common in Class A office leases. Simple, predictable — and typically priced with expenses baked into the rate.
Modified gross. Tenant pays base rent plus specific expense categories. Structures vary significantly — some modified gross leases pass through utilities only, others include tax increases above a base-year threshold. The term “modified gross” covers a wide range; what the tenant actually pays requires reading the lease carefully.
Triple net (NNN). Tenant pays base rent plus property taxes, insurance, and maintenance (CAM). Common in retail and industrial leases. Because expenses are passed through rather than built into rent, the base rent is typically lower than it would be under a gross structure — but the total occupancy cost depends on the expense pass-through.
How to compare them honestly
Comparing lease quotes across different structures by base rent alone is misleading. A $15 NNN rate is not directly comparable to a $22 full-service rate without knowing what the NNN pass-throughs actually are.
The only honest comparison is total occupancy cost: base rent plus all pass-through expenses, stated per square foot annually. That's the number that tells a tenant what the space actually costs.
Across a typical Nashville industrial lease, NNN expenses can run anywhere from $2 to $6 per square foot annually, depending on the property. Across a retail lease in a well-occupied center, CAM alone can run $5 to $10 per square foot. These numbers are real and need to be modeled — not assumed.
What matters for tenants
Two things to watch closely on any NNN lease:
What's actually included in the pass-through. NNN language varies between landlords. Standard pass-throughs include property taxes, building insurance, and CAM. Non-standard pass-throughs — management fees, reserves, capital items, administrative charges — should either be negotiated out or capped.
Expense caps and exclusions. Without protections, a triple net structure exposes the tenant to whatever the landlord's expenses happen to be. Controllable expense caps (typically excluding taxes and insurance, which are genuinely outside the landlord's control) protect the tenant from runaway increases. Exclusions for capital improvements, leasing commissions, and other landlord-benefit items prevent the pass-through from becoming a mechanism for the landlord to shift cost to tenants inappropriately.
A well-negotiated NNN lease can be entirely reasonable. A poorly-negotiated one can produce ten to fifteen percent more total occupancy cost over the term than the base rent suggested.