Calculating triple net lease costs requires understanding the various inputs that make up the total lease payment. The inclusion of property taxes, insurance, and Common Area Maintenance (CAM) charges means that tenants are responsible for their share of the operating costs of the building. This makes the overall lease cost variable and dependent on external factors, but accurately reflect the real expenses of property upkeep and operation.
Calculate Triple Net (NNN) Lease Costs
Please input the required fields (*) below to calculate the estimated costs for a triple net lease.
Triple Net NNN Lease Cost Calculator
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Triple Net NNN Lease Cost Calculation Formula
Similar to our other rental property calculators, there are several inputs required to accurately calculate the cost of a triple net lease. Our proprietary calculation takes into account all of these inputs to provide an accurate estimate of triple net costs as well as total rent payments including triple nets. Below we take a look at each input required for the triple net lease cost calculation:
- Unit Square Footage (SF): The unit square footage represents the total area occupied by the tenant, serving as a basis for determining their share of the overall property expenses.
- Percentage of Building Occupied (%): This percentage reflects the tenant’s proportion of the total leasable space in the building, impacting their portion of the triple net costs.
- Total Annual Base Rent Per Square Foot ($/PSF): This is the rate charged for one square foot of the space on an annual basis, forming the foundational cost of the lease before NNN expenses are added.
- Total Annual Property Taxes ($): This amount is the yearly property tax levied on the property, divided among tenants based on their leased square footage or occupancy percentage.
- Total Annual Insurance Costs ($): The yearly total of insurance premiums for the property, apportioned to tenants in relation to the size or value of their leased space.
- Total Annual Common Area Maintenance (CAM) Costs ($): This represents the yearly expenses associated with the upkeep of shared property areas, distributed to tenants based on their lease agreements.
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Triple Net NNN Lease Resources
What are Triple Net (NNN) Lease Costs?
Triple net lease costs refer to the financial obligation of a tenant to pay not only the base rental rate but also a proportionate share of the property’s real estate taxes, building insurance, and Common Area Maintenance (CAM) charges. This leasing structure makes the tenant responsible for almost all expenses associated with the property, providing a clear picture of the total cost of leasing the space beyond just the rent.
Triple Net NNN Lease Cost FAQ
How Are Triple Net Lease Costs Calculated for Each Tenant?
Triple net lease costs for each tenant are calculated based on their proportionate share of the building or complex, typically determined by the square footage they occupy. This pro-rata share affects how much each tenant contributes to the overall property expenses, such as taxes, insurance, and CAM charges.
Can Triple Net Lease Costs Fluctuate Over Time?
Yes, triple net lease costs can fluctuate annually as property taxes, insurance premiums, and maintenance costs change. Tenants may see their NNN expenses increase or decrease based on these variables and should plan their budgets accordingly.
Who is Responsible for Managing and Reporting NNN Costs?
The landlord or property management is responsible for managing, calculating, and reporting NNN costs to tenants. They provide detailed expense reports, typically on an annual basis, to ensure transparency and accuracy in billing.
What Happens if the Actual NNN Costs Are Less Than Estimated?
If the actual NNN costs are lower than the estimated payments made by the tenant, the excess amount is either refunded to the tenant or applied as a credit towards future rent or NNN expenses, as outlined in the lease agreement.
