When leasing commercial space, rent is often described as either NNN (Triple Net) rent or full-service rent. While the numbers may look similar at first glance, these two structures work very differently and misunderstanding them can lead to higher-than-expected occupancy costs.
Here is a clear breakdown of what each means and how to evaluate which structure makes the most sense for your business.
What Is NNN (Triple Net) Rent?
NNN rent means the tenant pays:
- Base rent, plus
- Operating expenses, commonly referred to as “NNNs”
These operating expenses typically include:
- Property taxes
- Building insurance
- Common Area Maintenance (CAM)
- Sometimes utilities and janitorial services
Under a NNN lease, the landlord passes these costs directly through to the tenant. If expenses increase, your rent increases, even though the base rent stays the same.
Example:
- Base rent: $18.00 per square foot
- NNNs: $12.00 per square foot
- Total occupancy cost: $30.00 per square foot
NNN leases are most common in industrial, warehouse, retail, and some suburban office buildings.
What Is Full-Service (Gross) Rent?
With a full-service lease, the quoted rent includes most or all operating expenses. Instead of paying base rent plus NNNs, you pay one all-in rate.
Full-service rent typically covers:
- Property taxes
- Building insurance
- CAM
- Utilities
- Janitorial services (often in-office)
Example:
- Full-service rent: $30.00 per square foot
- No separate NNN charges
Full-service leases are most common in downtown office buildings and multi-tenant office properties.