By Anthony Migliore, Senior Advisor
If you're involved in commercial real estate, you may have heard the term "triple net" or "NNN" charges. These charges are a common feature of commercial leases, and they can have a significant impact on the financial performance of a property. Here's what you need to know about NNN charges and how they work.
What Are NNN Charges?
In a commercial lease, NNN charges refer to the expenses that the tenant is responsible for in addition to the base rent. These expenses typically include property taxes, insurance, and maintenance costs for the property. The tenant is responsible for paying these charges directly to the landlord, in addition to their monthly rent payments.
How Are NNN Charges Calculated?
The exact amount of NNN charges can vary depending on the specific terms of the lease agreement. Typically, the landlord will estimate the annual costs for property taxes, insurance, and maintenance, and divide that amount by the total square footage of the property. This results in a per-square-foot charge, which is added to the base rent to determine the total monthly rent payment.
Why Are NNN Charges Important?
For landlords, NNN charges are an important source of revenue that can help offset the costs of owning and maintaining a commercial property. For tenants, NNN charges can be a significant expense that must be factored into their operating costs. Understanding the specifics of NNN charges is crucial for both parties to negotiate a fair lease agreement that benefits all parties involved.
NNN charges are a common feature of commercial leases that can have a significant impact on the financial performance of a property. By understanding how NNN charges work and how they are calculated, landlords and tenants can negotiate lease agreements that are fair and mutually beneficial. For more information on NNN charges and other aspects of commercial real estate, consult with a knowledgeable real estate agent or attorney.