The listing says $22/SF. You do the math, decide it works, and schedule a tour. Then you get the actual lease and discover that $22/SF is the base rent. The real number — the one you'll actually write checks for — is closer to $28 or $30/SF once the three nets are added.
This is how most tenants first encounter a triple net lease. The base rent gets advertised. The nets get buried in the lease.
Triple net, written as NNN, means you pay base rent plus three categories of operating expenses: property taxes, building insurance, and common area maintenance. Each "N" stands for one of those three. You pay your proportionate share of each, calculated based on what percentage of the building's total square footage you occupy.
If the building is 50,000 square feet and you're leasing 5,000 square feet, you occupy 10% of the building. You pay 10% of the property taxes, 10% of the insurance, and 10% of the CAM costs — on top of 100% of your base rent.
That sounds straightforward. It isn't, because each net has its own calculation methodology, its own potential for surprise costs, and its own negotiation levers. Here's what each one actually looks like in practice.
Property taxes are assessed by local governments and can change year to year based on reassessments, local budget cycles, and improvements made to the property. As a NNN tenant, you pay your proportionate share of whatever the tax bill is — and you don't control it.
On a well-located retail property in a major metro, property taxes alone can run $3–$6/SF annually. On a 2,000 square foot space, that's $6,000–$12,000 per year in taxes, on top of base rent. And when the county reassesses the property — which often happens when a building sells or when local tax rates change — your tax bill can jump significantly with no warning.
The thing tenants miss: if the landlord sells the building during your lease term, the reassessment triggered by the sale can double the property tax bill. That increase passes directly to you. You're paying more taxes because your landlord sold the property you have no ownership stake in.
Negotiated versions of NNN leases commonly include a tax increase cap — the tenant's proportionate share of property tax increases limited to a fixed annual percentage, with any excess absorbed by the landlord. This provision is frequently negotiated, particularly in multi-tenant buildings.
Building insurance in an NNN lease covers the landlord's policy on the structure — replacement cost, hazard coverage, and liability for the building itself. It does not cover your contents, your business interruption, or your liability as a business operator. You pay for the landlord's insurance on top of carrying your own.
Insurance costs vary by property type, location, and claims history, but $1–$3/SF annually is a common range for commercial properties in most US markets. On a 3,000 square foot space that's $3,000–$9,000 per year added to your occupancy cost.
The nuance most tenants don't notice: if the building has filed multiple insurance claims in prior years — from storms, flooding, fire, or other incidents — the landlord's premiums may already be elevated, and the tenant pays a proportionate share of that elevated rate. The current insurance premium and the last three years of claims history are information that is rarely volunteered, and tenants commonly request both during due diligence.
The specific coverages included in the building policy also matter. Some landlord policies have coverage gaps that create disputes when something goes wrong — the tenant has been contributing to insurance that doesn't cover the scenario that actually arises.
CAM is the most complicated of the three nets, the most variable, and the most frequently disputed. It covers the operating costs of shared spaces: parking lot maintenance, landscaping, snow removal, exterior lighting, janitorial services for common areas, property management fees, and whatever else the landlord decides to include.
A typical CAM estimate runs $3–$8/SF annually on retail properties, though the range is wide depending on property age, location, and management quality. On a 2,500 square foot space at $5/SF in CAM, that's $12,500 per year — $1,042 every month, just in CAM.
Here's what makes CAM genuinely unpredictable: the landlord estimates your monthly CAM charges at the start of the year, you pay that estimate monthly, and then at year-end a reconciliation compares the estimate to the actual costs. If actual costs exceeded estimates, you get a bill for the difference. These true-up invoices — surprise charges arriving months after you thought the year was settled — regularly run thousands of dollars.
Not everything that costs the landlord money should be your problem. CAM clauses in landlord-drafted leases are often written as catch-alls with no defined exclusions. That means capital improvements — a new roof, parking lot repaving, HVAC replacements — can show up in your CAM charges. You're paying for improvements to a building you don't own, amortized into your annual operating costs.
Negotiated versions of NNN leases commonly include explicit CAM exclusions for: capital expenditures and structural repairs, costs to lease vacant space, landlord's legal fees unrelated to building operations, depreciation on the building or equipment, and management fees above 5% of actual operating expenses.
The management fee exclusion matters. Landlords routinely charge 10–15% of gross CAM expenses as a management fee — which is the landlord billing you for the cost of managing their own property. On $200,000 in annual building operating costs, a 15% management fee adds $30,000 to the CAM pool, of which you pay your proportionate share. A 5% cap cuts that to $10,000. That's $20,000 in savings split across tenants — real money over a 5-year lease.
Most NNN leases give tenants the right to audit the landlord's CAM calculations. Most tenants never use it. Commercial tenant attorneys who regularly audit CAM charges routinely find overcharges — incorrect allocation of costs, inclusion of non-allowable expenses, management fee overages — that result in recoverable credits.
Audit rights, when exercised, identify whether the landlord's CAM calculations are accurate. Even a single audit in year two of a long lease — and a finding of even modest overcharges — tends to sharpen the landlord's accounting for the remainder of the term.
Where leases lack an audit right entirely, negotiated versions commonly add one — typically the right to audit CAM charges within 12 months of receiving the annual reconciliation statement, with any overcharges refunded within 30 days.
Multi-tenant buildings often include a gross-up provision in the CAM calculation. Here's what it does: if the building isn't fully occupied, the landlord calculates CAM charges as if it were — typically at 90–95% occupancy — and allocates those inflated costs across actual tenants.
The landlord's argument is that certain costs (HVAC for common areas, exterior lighting, elevator maintenance) are fixed regardless of occupancy, and it's unfair to burden existing tenants with the full cost of those fixed expenses. That argument has some merit. The problem is that gross-up clauses can also effectively charge you for vacant space your landlord hasn't been able to fill — and badly drafted gross-up provisions give landlords significant discretion in how they apply the calculation.
Negotiated versions of gross-up clauses commonly include three protections: the gross-up applies only to variable expenses (not fixed costs), is capped at a defined occupancy percentage, and requires the landlord to document actual vs. grossed-up costs annually.
A restaurant tenant signs a NNN lease for 2,800 square feet at $24/SF base rent in a suburban strip mall. The lease lists estimated NNN at $6.50/SF. Here's the actual annual cost breakdown:
Base rent: $67,200. Property taxes (10% of $85,000 total): $8,500. Building insurance (10% of $32,000 total): $3,200. CAM (10% of $180,000 total including management fee): $18,000. Total annual occupancy cost: $96,900 — or $8,075/month.
The listing said $24/SF. The real cost is $34.60/SF. That $10.60/SF gap — entirely from the three nets — is $29,680 per year that wasn't in the tenant's original budget.
This is not a landlord doing anything improper. This is a standard NNN lease working exactly as designed.
The actual property tax bill, insurance premium, and prior two years of CAM reconciliation statements are real numbers, not estimates, and tenants commonly request all three during pre-signature due diligence. They establish immediately whether the landlord's NNN estimate is realistic or optimistic.
Negotiated versions of NNN leases commonly include CAM exclusions for capital expenditures, a 5% cap on management fees, an annual CAM audit right, and a NNN expense cap — total NNN increases limited to 3–5% annually — so the tenant's occupancy cost doesn't spiral in years three through seven of a long lease.
LiabilityScore™ reads NNN leases at the pre-signature stage. The tool flags NNN clauses, identifies whether exclusions are missing, and surfaces the specific language landlords use to expand what counts as a billable operating expense — in plain English, before the first reconciliation statement arrives. For a deeper look at NNN clause language and negotiation leverage, see the Triple Net (NNN) lease clause guide. LiabilityScore™ provides legal information — not legal advice. The legal judgment about what to do with that information is yours.
Related: commercial lease analysis.
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This article is for educational purposes only and does not constitute legal advice. LiabilityScore™ identifies potentially risky contract terms — it is not a substitute for review by a licensed attorney. Always consult qualified legal counsel for advice specific to your situation.