NNN lease guide
What triple net actually adds to your rent.
NNN means base rent plus property taxes, building insurance and shared upkeep. On the 8 bays open right now that second part runs $5.15 to $6.75 per square foot per year, about 26 to 35 percent of the monthly total.
The three nets
Triple net is named for the three costs that sit on top of base rent. They are the building's costs, divided by who occupies it.
- Property taxes
- Your share of the county bill, split by how much of the building you occupy. A 2,000 sq ft bay in a 20,000 sq ft building carries a tenth of it.
- Insurance
- The policy on the building itself. Cover for your own tools, stock and liability is separate, and stays yours to carry.
- Common area maintenance
- The shared upkeep: plowing and sweeping the lot, exterior lighting, landscaping, and repairs to the parts of the building every tenant uses. CAM for short.
How the number is worked out
Four figures, added. Nothing about the arithmetic is hard. What makes NNN feel opaque is that the middle three usually arrive after you have signed.
“Your share” means your pro rata share
The tax bill, the insurance premium and the upkeep are costs for the whole property, not for your bay. What reaches your invoice is the fraction of the building you occupy. That fraction is your pro rata share, and it is the one number worth checking on any NNN lease, because every other charge is multiplied by it.
Illustration, round numbers
- Your bay
- 3,000 sq ft
- The whole building
- 20,000 sq ft
- Your pro rata share
- 15%
- Building's taxes, insurance and CAMFor the year
- $120,000
- 15% of that is yours
- $18,000/yr
- Divided by twelve
- $1,500/mo
The same number, per square foot
$6.00per sq ft / year
The same $1,500 a month, stated the way a lease quotes it.
Check two things before you sign
- That the building square footage on the bottom of that fraction is the real one.
- Whether it counts leasable area or total area. A building measured generously shrinks your share on paper, then makes it back elsewhere.
And on a bay we actually have open
Same arithmetic, real figures, in Commerce City right now.
- Base rent
- $3,000
- NNNTaxes, insurance and CAM, already your share
- $1,595
- What you pay
- $4,595
The NNN on this bay
$6.38per sq ft / year
Which is where it lands on most of our buildings.
Both numbers, already added
Every price on this site is the bottom line, with NNN in it. You are never quoted the top number and left to work out the rest.
See the all-in price on every unitWork out the NNN on your square footage
Put in the size you are looking at and the rate from the lease. It gives you the monthly figure to add to base rent.
The size of the bay.
Ours run $5.15 to $6.75.
NNN per month
$992
$11,900 a year
This is the NNN portion on its own. Add your base rent for the full monthly payment. On our listings the two are already added together.
Where NNN goes wrong
The structure is fine. Three things about how it is usually administered are what cost tenants money.
- The annual reconciliation
- Twelve months of estimates trued up in a single bill, usually in the first quarter. A year of small differences arrives as one number you did not budget for.
- A statement you cannot check
- One line reading operating expenses, with no invoices behind it and no working shown for how your share was reached.
- No number until you sign
- The NNN estimate turns up with the lease rather than with the listing, so the monthly figure you compared against other buildings was never the real one.
How ours is administered differently
Same lease structure, four things handled another way.
- Reconciliation
- UsuallyOnce a year, trued up in one bill
- With usEvery quarter, so the adjustments stay small
- The price you compare
- UsuallyBase rent. NNN is estimated later
- With usThe all-in monthly figure, on the listing
- Statement detail
- UsuallyA total, and a category name
- With usThe invoices, and how your share was worked out
- Who explains a charge
- UsuallyA broker relaying an answer
- With usThe people who own the building
Questions people actually ask
How much does NNN add to the rent?
On the 8 bays open right now, NNN runs $5.15 to $6.75 per square foot per year. That is roughly 26 to 35 percent of what you pay each month. Every price on this site is the all-in figure with NNN already in it, so you are not adding a second number yourself.
Can you show the math on a real unit?
The 3,000 sq ft bay in Commerce City is $3,000 base rent plus $1,595 NNN, so $4,595 a month all in. The NNN side works out to $6.38 per square foot per year.
What is a pro rata share, and how is mine calculated?
Your pro rata share is the fraction of the building you occupy: your square footage divided by the building's. A 3,000 sq ft bay in a 20,000 sq ft building is a 15 percent share, so 15 percent of the building's taxes, insurance and common area maintenance is yours. It is worth checking, because every NNN charge on your invoice is multiplied by that one number. Ask which building square footage is being used, and whether it counts leasable area or total area.
What is actually in CAM?
Common area maintenance is the shared upkeep: snow plowing and lot sweeping, exterior lighting, landscaping, and repairs to the parts of the building every tenant uses. Work inside your own bay is not CAM.
How do quarterly reconciliations work?
Four times a year we compare what the building actually spent against what was estimated and adjust from there. The gaps stay small, which is the point. An annual reconciliation saves twelve months of drift for one bill, and that bill is the one that wrecks a first quarter.
Can I see the paperwork behind a charge?
Yes. Ask about any line and you get the backup for it: the invoices, and how your share was worked out from the square footage you occupy.
What if a charge looks wrong?
Ask, and you get the calculation and the documents behind it. If it is wrong, it gets corrected. You are dealing with the people who own the building, not a broker relaying an answer from someone else.
Are all your spaces triple net?
Yes. All 8 units we have open are NNN leases, so the structure on this page is the structure you will see on every listing.
Want the NNN on a specific bay?
Open right now in Arvada, Aurora, Commerce City, Denver, Federal Heights, Lakewood. Ask and we'll send the numbers before you tour.