Triple net lease calculation example
In a commercial lease, both the base rent and any NNN expenses are calculated using a flat cost per square foot. Imagine you're leasing a 1,000-square-foot office space with a base rental rate of $25 per square foot and an NNN rate of $10 per square foot.
- Base rent: 1,000 SF x $25 per SF = $25,000 per year or $2,084 per month
- NNN expenses: 1,000 SF x $10 per SF = $10,000 per year or $834 per month
- Total lease rate: $35,000 per year or $2,917 per month
How does an NNN lease differ from other types of commercial real estate leases?
Although the triple net lease is a common lease structure, it's only one type of commercial real estate lease. To help make creating a lease agreement easier, we've briefly outlined the other types of commercial leases for you below. Read them over to get a better sense of what type of lease might be the best bet for your investment property.
Gross lease
Also known as a "full-service lease," a gross lease simply charges the tenant base rent. With this type of lease, the landlord agrees to cover nearly every operating expense necessary to run the building, including maintenance fees, property taxes, and building insurance.
Modified gross lease
A modified gross lease is a middle ground between net leases and gross leases. Here, the tenant usually agrees to pay a base rental rate, utilities, and a portion of their NNN costs. The details of what is paid by each party will vary according to the individual lease, but typically the tenant's NNN charge is based on the percentage of the building that they occupy.
N lease
An "N lease" is also known as a "single net lease." With a single net lease, the lessee is responsible for paying their base rent and the real estate taxes. Here, the landlord is responsible for paying the property insurance as well as any operating expense for the entirety of the lease term.
