What is a triple net lease (NNN)?

A triple net lease (NNN) is a commercial lease structure where the tenant agrees to pay, in addition to the base rent, three categories of property costs that are typically the landlord's responsibility: property taxes, building insurance premiums, and maintenance costs.

What the Tenant Pays Under NNN

• Base rent: Agreed rental payment to the landlord.
• Property taxes: Municipal and government taxes on the property.
• Building insurance: Premiums for structural and liability insurance.
• Maintenance costs: Upkeep of the building structure and common areas.

Benefits

• Landlord receives a net, predictable income without expense uncertainty.
• Tenant has control over the building's operating standards.
• Common in long-term leases for standalone retail, warehouses, and industrial facilities.

In the Indian Context

While the NNN terminology is primarily used in US commercial real estate, the concept of tenants bearing operating costs (taxes, insurance, maintenance) is increasingly built into Indian commercial lease agreements, particularly for large-format retail, logistics parks, and Built-to-Suit developments.

A triple net lease shifts operating cost risk to the tenant, making it attractive for investors seeking passive, expense-free income. For tenants, NNN leases provide operational control and certainty over the property's maintenance standards. Both parties should conduct rigorous due diligence on current and projected operating cost levels before committing to a long-term NNN structure.