Triple Net (NNN) Lease Cost Calculator
Stop guessing your monthly rent. Calculate the true cost of your triple net lease including base rent and estimated NNN expenses (taxes, insurance, maintenance).
What Is a Triple Net Lease?
A Triple Net (NNN) Lease is a lease agreement where the tenant pays Base Rent PLUS property taxes, insurance, and maintenance. Unlike a gross lease, where the landlord covers these costs, an NNN lease passes them directly to you. This structure is common in commercial real estate because it gives tenants more control over their space while landlords receive "net" income without deductions.
Why does this matter? A lower base rent often masks higher total expenses. Understanding the full "Triple Net" obligation is key to managing cash flow and avoiding surprise bills.
The 3 Nets: Understanding Your Inputs
Base Rent
The fixed fee you pay for the right to occupy the space. This is the "face rate" quoted by landlords.
Property Taxes
Your pro-rata share of the building's total property tax bill. This amount is estimated based on the total square footage of the building.
Insurance
Your share of the building's insurance premiums. This covers liability and property damage insurance for the structure.
CAM (Common Area Maintenance)
Costs for maintaining shared areas, including parking lots, landscaping, snow removal, and janitorial services for common lobbies.
Higher CAM charges directly result in a higher Monthly Cost.
Triple Net Lease Calculation Formula
Total Annual Cost = (Base + Tax + Ins + CAM) × Sq Ft
Effective Rent Rate:
- Total Annual Cost ÷ Lease Area
This formula allows for an "apples-to-apples" comparison between different properties, even if they have different base rent structures.
Note: 1 sq ft ≈ 0.0929 sq m.
How to Use This Calculator
Follow these steps to determine your total lease obligation accurately.
- Select Property Type: Choose Retail, Office, or Industrial to provide context for your results.
- Enter Lease Area: Input the total square footage found in your lease proposal.
- Input Base Rent: Enter the asking base rent rate per square foot.
- Enter NNN Expenses: Input the estimated costs for Tax, Insurance, and CAM (often found in the "Additional Rent" clause).
Pro Tip
If expenses are listed as "estimated," ask the landlord for the previous year's actuals to get a more accurate prediction.
Interpreting Your Triple Net Lease Results
Once you calculate your Effective Rent Rate ($/sq ft), compare it to these industry benchmarks to gauge value.
- Low (< $15/sq ft): Typical for older industrial buildings or rural office spaces. Economical operating cost location.
- Moderate ($15 - $30/sq ft): Standard range for suburban office parks and standard retail locations.
- High ($30 - $50/sq ft): Common for prime urban retail, medical office buildings with high HVAC needs, or Class A office space.
- Premium (> $50/sq ft): Top-tier urban core locations with high operating expenses.
NNN Ratio Check:
If your NNN expenses exceed 50% of your total rent, you are in an "expense-heavy" lease. This means your base rent is low, but your monthly operating costs are significant.
Triple Net vs. Gross Lease Comparison
Understanding the trade-offs between lease structures.
| Feature | Triple Net (NNN) | Modified Gross | Full Service Gross |
|---|---|---|---|
| Base Rent Level | Lower | Moderate | Higher |
| Tenant Pays Taxes? | Yes | Sometimes | No |
| Tenant Pays Insurance? | Yes | Sometimes | No |
| Tenant Pays CAM? | Yes | Sometimes | No |
| Predictability | Variable | Moderate | High |
Variables That Impact Lease Costs
- Age of Building: Older buildings typically have higher maintenance (CAM) costs due to aging systems.
- Location: Urban areas generally have higher property tax rates and insurance premiums than suburban or rural areas.
- Lease Clauses: This calculator assumes full pass-through. "Base Year" provisions or "Expense Caps" in your lease can legally limit your NNN liability.
- Management Quality: Poor property management often leads to inefficiencies and higher CAM costs over time.
When to Use a Triple Net Lease Calculator
Scenario A: Comparing Two Spaces
Space A has a $20 base rent + $10 NNN. Space B has a $25 base rent + $5 NNN. Which is cheaper? The calculator will show that at the same size, the total cost is identical ($30/sq ft), helping you negotiate based on the split rather than the total.
Scenario B: Budget Forecasting
Plan for future expenses by manually adjusting the NNN inputs to account for a 3-5% annual inflation in taxes and maintenance.
Scenario C: Tenant Rep Broker Preparation
Use this tool to validate a landlord's proposal before signing. If the landlord's estimate differs significantly from your calculation, ask for an audit of the expense reconciliation.
Calculator Limitations
This tool provides an estimate based on standard arithmetic.
- Exclusions: Does not include utilities (if separately metered), janitorial services strictly inside your suite, or Capital Expenditures (Cap Ex) like roof replacement unless specified in the lease.
- Escalations: Does not account for CPI (Consumer Price Index) escalations or fixed annual rent increases over the lease term.
- Common Mistake: Confusing "Asking Rent" (Base) with "Total Effective Rent" (Base + NNN). Always negotiate on the total effective rent.
Disclaimer: This is an estimation tool. Consult a commercial broker for final lease analysis.
Frequently Asked Questions
Sources & References
Our calculation logic is derived from established commercial real estate standards.
- CCIM Institute — Net Lease Definitions
- NAIOP — Operating Expense Benchmarks
- BOMA — Measurement Standards
About the Author
Nithya Madhavan
Web developer and data researcher creating accurate, easy-to-use calculators across health, finance, education, and construction and more. Works with subject-matter experts to ensure formulas meet trusted standards like WHO, NIH, and ISO.