Triple Net Lease (NNN)
Candlefocus EditorThe major advantage of a triple net lease is that it shifts the burden of operating expenses to the tenant, which could lead to lower rental payments than other types of leases. The average expenses paid by the tenant generally include property and liability insurance, water, sewer, garbage, electricity, and the maintenance of building systems such as the roof, plumbing, and HVAC, especially when tenants are leasing large buildings or spaces containing multiple tenants.
Triple net leases are particularly attractive for long-term investments in commercial real estate because the tenant is essentially assuming their share of the costs that would otherwise be the responsibility of the property owner. This provides the property owner with a steady, low-risk income stream, making triple net lease investments a popular option among real estate investors. However, the tenant should receive assurances from the landlord that they will not be held responsible for repairs that are the landlord’s responsibility under the lease agreement.
Overall, triple net lease agreements are advantageous for both tenants and landlords because they provide more stability and security than other types of leases. Tenants benefit from lower rental payments, while landlords are able to receive more predictable income from their investments.