What is a triple net expense?

Commercial leases frequently call for the the tenant to pay “triple net” expenses in addition to the base rent. But what is a triple net expense?

Triple net expenses (also written as NNN expenses) are building expenses that the landlord charges the tenant based on the tenant’s pro rata share of the building. The expenses include the property taxes, building hazard insurance, and common area maintenance. Those expense can vary widely from building to building, so it is critically important that you understand what the charges will be before you sign a lease. For an office or retail building in Jackson Hole, the NNN expenses typically range from $3.00 to $7.00 per square foot per year. For a 2,000 square foot lease, that means the NNN portion of the rent could add between $6,000 to $14,000 to the annual rent.

The rates vary because taxes may be higher or lower for different buildings, and because some buildings are more or less efficient to maintain. For example, a building with a large yard and/or parking lot will have significant landscaping and snow removal expenses, while a downtown building with no yard will not have that expense.

A knowledgeable commercial leasing agent will be able to advise you on NNN rates for various buildings, and will be able to give you the expenses for comparable buildings to guide you to an informed decision.