Lease what does triple net mean

There is no profit to be derived from the operating expenses. This is different from a full-service lease structure, in which the tenant agrees to pay a predetermined rate that includes operating expenses. On the other hand, because operating expenses can vary year to year, it can be harder to budget for your annual rental expenses.

In addition to your rental rate and operating expenses, there are other elements of a NNN lease that can affect your overall financial obligation. A tenant improvement TI allowance is a type of incentive offered by landlords to encourage tenants to sign a lease. This means you will pay one lump sum for rent, from which the landlord pays his expenses. On the gross lease, the landlord pays all or most expenses associated with the property.

This includes taxes, insurance, and common area maintenance out of the rents received from tenants and could also include the utilities and janitorial services. You are responsible for paying your own property insurance and taxes on a gross lease. So which type of lease agreement is most beneficial to you, the tenant?

Well this is up to the individual, and there are pluses to both. Usually the monthly rent on an NNN lease is lower than a gross lease, but with an NNN lease you has a higher level of responsibility for the building itself. For example, this winter, the cost of snow removal is going to be much higher than in previous years and would not be passed on to you.

There are also additional obligations s to Triple Net leases you need to be aware of. In exchange for receiving a lower price per square foot on your monthly base rent, the tradeoff is that you must be willing to take on the risk of the unknown. There could be a natural disaster that causes significant damage to the property — for which you are now responsible. Or there could be a system or machine failure, such as the HVAC goes down heating, ventilation and air conditioning that requires you to invest a large amount of money into repair costs or increased rent and utilities.

Our CARR team is happy to have confidential conversations with you regarding all these considerations and how they apply to your actual practice.

We pride ourselves in advocating on your behalf to help you make decisions that are in your best interest and set you up for the highest level of success for years to come. The commercial real estate industry is nuanced and complex, and we want you to delegate navigating this space to us! This allows you more time to focus on the complexities of the other aspects of your practice, while leaving the negotiation, site selection, due diligence process of commercial real estate to us. Your location says a lot about your practice, and effects every area of your business, such as staffing, patient retention, referrals, and much more.

Our experts are here to help you dig into the marketability of each location, property and space you are considering in order to leverage your commercial property for the maximum benefit of your practice.

Throughout this process, our experts are committed to walking alongside you every step of the way. These costs typically include:. The allocation of costs between the landlord and tenant may vary depending on the negotiated agreement. Historically, triple net refers to leases where a tenant rents an entire freestanding commercial building and pays for all property expenses.