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What Does NNN Mean in a Commercial Lease?
2017-5-23 15:04:31, Steve Gillespie

Texasofficeadvisors.com

 

When leasing commercial office space, there is a lot of industry jargon that most business owners do not know or understand. That is why if you are going to be leasing commercial space, it is best to have a quality Tenant Representative help you throughout the office space leasing process. In this post we’ll be covering what does NNN mean in a commercial lease.

 

Often times tenants will see quoted office space rental rates with different words or letters behind them. Gross, Net, FSG, MG, NNN, are all commonly depicted in the commercial real estate marketplace. To simplifying things, you have two main lease types when it comes to leasing office space; either a gross lease or net lease. You can learn more about the difference between these by clicking here.

 

So What Does NNN Mean in a Commercial Lease?

Each “N” in NNN stands for something. NNN is often referred to as a “triple net lease” as NNN means net, net, net. Rather than being a gross lease where everything is included in the rate, a net lease is missing something from the rate. Most commonly you’ll have the base rate shown excluding the tenant’s share of the building’s taxes (one “N”), common area maintenance (the 2nd “N”), and insurance (the 3rd “N”). Sometimes utilities are included in those amounts or the base rental rate too. Sometimes the “nets” missing from a gross lease rental rate are also referred to as OPEX.

 

Here is an example of how to figure out the rental rate when NNN is shown on an office space listing:

 

Space Size: 3,500 SF

Rental Rate: $18.50/SF NNN

CAM (Common Area Maintenance): $7.44/SF

Base Year Taxes: $4.81/SF

Landlord’s Insurance: $0.25/SF

 

Step 1: Add up everything to get the gross rental rate

$18.50 + $7.44 + $4.81 + $0.25 = $31.00/SF Gross

 

Step 2: Multiply the rate for the annual rent

$31.00 x 3,500 SF = $108,500 in total gross rent for the year

 

Step 3: Divide to determine the monthly rent

$108,500/12 = $9,041.67 in total gross rent per month

 

As you can see, figuring out how much a commercial office space actually costs can be a very confusing process. That is why it is best to have a Tenant Representative help you out. For more information on the Tenant Representation Services that can help save you time and money during the office leasing process or to answer any questions, feel free to contact us directly.

 

Source Link:  http://texasofficeadvisors.com/what-does-nnn-mean-commercial-lease/

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