CRE 101 · deweyluong.realtor
NNN Lease Explained: Triple Net Leases for Georgia Commercial Investors and Tenants
Base rent is not the whole rent. By Túy “Dewey” Luong, CCIM — Founding Broker, SERHANT. Atlanta · 318 closed sales / $281.2M career volume · 678-707-2498
NNN — triple net — is the lease structure behind most retail, restaurant, and single-tenant commercial deals in Gwinnett and across Metro Atlanta. It is also the structure most often misread, because the rent on the flyer is not the rent the tenant actually pays, and not the whole income the investor actually keeps.
This page explains the three nets in plain English, how NNN compares to gross and modified gross leases, and what to check before you sign one as a tenant or buy one as an investor.
What the three nets are
- Taxes: the tenant's share of real estate taxes, usually pro-rata by square footage in a multi-tenant center.
- Insurance: the tenant's share of the property insurance the landlord carries on the building and common areas.
- CAM: operating and maintenance costs for shared areas. What counts as CAM, and what is excluded, is defined by the lease — not by custom.
That is why an NNN space can be quoted at a lower per-square-foot rent than a gross space and still cost the tenant more in total. Start with cap rate and NOI to see how this income is valued when the property sells.
Gross, modified gross, NN, and NNN — the difference that matters
| Structure | Tenant pays | Landlord pays |
|---|---|---|
| Gross (full service) | One all-in rent | Taxes, insurance, CAM, and most operating expenses out of that rent |
| Modified gross | Base rent plus some agreed expenses, often increases over a base year | The remaining expenses, as negotiated |
| NN (double net) | Base rent plus taxes and insurance | CAM / maintenance, as defined in the lease |
| NNN (triple net) | Base rent plus taxes, insurance, and CAM | Only what the lease leaves with the landlord — often roof and structure, sometimes less |
Labels vary by market and by landlord. Two leases both called NNN can allocate roof, structure, parking resurfacing, and capital items differently. The label is a starting point. The clauses are the deal.
Worked example. The numbers below are made up to teach the mechanics. This is not a real property.
| Step | Number |
|---|---|
| Retail space in Gwinnett | 5,000 SF |
| Base rent (NNN) | $22.00 / SF / year = $110,000 / year |
| Taxes + insurance + CAM estimate | $7.50 / SF / year = $37,500 / year |
| Tenant total occupancy cost | $147,500 / year ($29.50 / SF all-in) |
| Investor value on base rent at a 6.5% cap rate: $110,000 ÷ 6.5% | ≈ $1,692,000 |
Read the example both ways. The tenant who compares only the $22.00 base rent to a $28.00 gross quote thinks NNN is cheaper — until the $7.50 in pass-throughs is added. The investor who prices only the base rent misses whether that rent is above market, how much term is left, and whether CAM reconciliations have been clean. Both mistakes are common, and both are avoidable before signing.
What to check before signing or buying
- CAM caps and exclusions: is there a cap on controllable CAM increases? Are capital items, management fees, and landlord insurance excluded or amortized? Does the tenant have audit rights on the annual reconciliation?
- Roof and structure: who pays, in plain language in the lease — not assumed from the NNN label.
- Term and escalations: remaining term, renewal options, and annual rent bumps drive investor pricing. A long term with escalations from a strong tenant is a different asset than a short term at above-market rent.
- Absolute NNN vs NNN: some leases marketed as NNN still leave the landlord with obligations. Absolute NNN shifts nearly everything to the tenant. Verify which one you have.
- Tenant credit (for investors): in a single-tenant NNN deal, you are buying the tenant's promise to pay as much as the building. Review financials the way a lender would — see DSCR for how that test works.
NNN is also the standard structure in a sale-leaseback — the seller stays as an NNN tenant — and it shapes the choice in lease vs buy when a business compares leasing NNN against owning.
The risks, stated plainly
- Pass-throughs move. Taxes and insurance in Georgia have risen faster than many CAM caps assumed. A tenant's all-in cost can climb even when base rent is fixed.
- Reconciliation surprises. An annual CAM true-up can arrive as a single large bill if estimates were low. Audit rights and clean history matter.
- Investor concentration. A single-tenant NNN asset is one tenant, one lease, one expiration date. Price that concentration; do not ignore it.
- Above-market rent cuts both ways. It inflates the price an investor pays today and increases vacancy risk when the lease ends.
Cho nhà đầu tư và chủ doanh nghiệp người Việt
Hợp đồng thuê NNN (triple net) là cấu trúc phổ biến nhất cho mặt bằng bán lẻ, nhà hàng và thương mại tại Gwinnett và Metro Atlanta. Người thuê trả tiền thuê cơ bản cộng với ba khoản: thuế bất động sản, bảo hiểm, và phí bảo trì khu vực chung (CAM). Vì vậy không nên so sánh chỉ giá thuê cơ bản — phải tính tổng chi phí thuê thực tế mỗi năm. Trước khi ký hoặc mua một bất động sản NNN, cần kiểm tra: giới hạn tăng CAM, điều khoản mái và kết cấu, thời hạn thuê còn lại, mức tăng thuê hàng năm, và uy tín tài chính của người thuê. Đây là thông tin giáo dục chung, không phải tư vấn pháp lý — hãy trao đổi với luật sư của bạn trước khi ký.
- Hợp đồng thuê NNN (triple net) là gì?
- Hợp đồng thuê NNN là hợp đồng trong đó người thuê trả tiền thuê cơ bản cộng với ba khoản chi phí của bất động sản: thuế bất động sản, bảo hiểm, và phí bảo trì khu vực chung (CAM). Vì vậy, giá thuê NNN tính theo square foot thường thấp hơn giá thuê gross, nhưng tổng chi phí thuê thực tế phải tính cả ba khoản cộng thêm. Trước khi ký hoặc mua, cần kiểm tra kỹ điều khoản về mái, kết cấu, giới hạn tăng CAM và quyền kiểm tra sổ sách chi phí.
Frequently asked questions
- What does NNN mean in a commercial lease?
- NNN, or triple net, means the tenant pays base rent plus three categories of property expense: real estate taxes, property insurance, and common-area maintenance (CAM). The landlord receives base rent largely net of those operating expenses, which is why NNN rent quoted per square foot looks lower than gross rent for the same space.
- Is an NNN lease cheaper than a gross lease?
- Not necessarily. The total occupancy cost is what matters. An NNN space at a lower base rent plus taxes, insurance, and CAM can cost the same as, or more than, a gross lease at a higher all-in rent. Compare the full annual cost, including CAM estimates and any caps, not the base rent alone.
- Who pays for the roof and structure in an NNN lease?
- It depends on the exact lease language, and this is one of the most negotiated points. Many NNN leases make the tenant responsible for interior and routine maintenance while the landlord retains roof and structure, but some leases shift more to the tenant. Never assume — read the maintenance and capital-expenditure clauses before signing or buying.
- What should an investor check before buying an NNN property?
- Tenant credit and financial strength, remaining lease term and renewal options, rent escalations, whether the lease is truly absolute NNN or has landlord obligations, CAM reconciliation history, and whether the rent is at, above, or below market. Price follows the durability of that income, which is the cap rate the market applies.
This page is general education, not legal, tax, or accounting advice. Lease terms vary by document and situation — confirm your lease with your attorney and CPA before you sign or buy. Túy “Dewey” Luong, CCIM is a real estate broker, not an attorney.
Looking at an NNN lease or an NNN property in Metro Atlanta or Gwinnett — as a tenant, a buyer, or a seller? Reply for a straight read on the total cost and the terms that matter. 678-707-2498 · dewey.luong@serhant.com
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