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NNN or Triple Net: How Does That Work?

When it comes to your lease, you’ve heard NNN or Triple Net – but what does it mean?

You’ve heard it before, or maybe you already know from experience: investing in real estate builds wealth. And while diving into the world of commercial real estate investments may seem unachievable, there are ways to start small and build a portfolio over time.

We want to help you build a foundation of knowledge about commercial real estate investment. We’re defining more common real estate terms.

When you get into commercial real estate, you’ll want to understand the jargon around commercial leasing.

  • That’s stuff like: TI Allowance, or Tenant Improvement allowance, can often be found in commercial real estate leases. This is a key part of a lease to consider if you rent space for your business. The TI Allowance is a budget that lets the tenant customize their space to fit their business needs and is paid by the landlord.
  • NNN Expenses are the fees paid by a commercial tenant for their share of the common area maintenance, real estate taxes, and landlord insurance premiums. Commercial leases where the tenant pays these expenses are referred to as triple net leases.
  • Commercial spaces may be advertised as “$12/psf NNN” meaning $12 per square foot is the base rent and the NNN expenses will be in addition to that. CAM, or common area maintenance, is one of the three NNN Expenses that commercial tenants pay for as additional rent. This fee pays for the upkeep of common facilities, such as parking lots and hallways.
  • Build To Suit, in the commercial real estate world, means a property that is built custom for a tenant. Like your neighborhood Starbucks, these customized properties are built by a developer specifically for the tenant.
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