Is a Triple Net Lease Right for Your Business? Pros, Cons, and Cost Breakdown

A Triple Net (NNN) Lease is one of the most common structures in commercial leasing—especially in retail, medical, and industrial real estate. But is it right for your California business?

What Is a Triple Net Lease?

In an NNN lease, the tenant agrees to pay:

• Net property taxes

• Net insurance

• Net maintenance costs

These costs are paid in addition to base rent, giving landlords a hands-off investment while placing most operational responsibilities on the tenant.

Pros of an NNN Lease

• Lower base rent: Often more affordable upfront than gross leases.

• Long-term control: Many NNN leases run 5–10 years or more, providing stability.

• Ideal for build-outs: If you’re customizing the space, this gives you more freedom.

• Attractive for franchisees: Common among national brands and retail tenants.

Cons of an NNN Lease

• Unpredictable monthly costs: Expenses like property taxes and insurance can rise unexpectedly.

• Responsibility for repairs: You might be on the hook for everything from HVAC systems to roof maintenance.

• Lease complexity: NNN leases often come with more legal language—review with a real estate attorney.

NNN Lease Cost Breakdown Example

Let’s say your base rent is $2.00 per square foot. Your additional NNN expenses might look like:

• Property Taxes: $0.50/sqft

• Insurance: $0.15/sqft

• Maintenance: $0.35/sqft

• Total Effective Rent: $3.00/sqft

Understanding this total cost is key to managing your budget accurately.

NNN leases can be excellent for the right type of business, especially in California’s high-demand markets. But before signing, make sure you understand the full scope of your financial and maintenance responsibilities.