A triple net lease, or NNN lease, is a commercial lease where the tenant pays base rent plus its share of the property’s three main operating costs: property taxes, insurance and common area maintenance (CAM). It’s the most common lease structure for warehouse, flex and retail space in Fort Lauderdale and Broward County.
The Three “Nets”
- Property taxes. The tenant pays its pro-rata share of the real estate taxes on the building.
- Insurance. The tenant pays its share of the landlord’s property insurance. In Florida that includes windstorm coverage, which has risen sharply in recent years.
- Common area maintenance (CAM). Landscaping, parking lot upkeep, common-area lighting, trash and sometimes property management fees.
Tenants usually also carry their own liability and contents insurance, and pay their own utilities.
How NNN Rent Is Quoted
NNN space is quoted as base rent per square foot per year, plus the NNN charge. A hypothetical example for a 2,000 SF warehouse:
- Base rent: $16.00 per SF per year
- NNN charges: $5.00 per SF per year
- Total occupancy cost: $21.00 per SF per year, or $42,000 a year ($3,500 a month)
Always compare spaces on total occupancy cost, not base rent alone. A space with a low base rent and high NNN charges can cost more than one with higher rent and lower charges.
NNN vs. Gross vs. Modified Gross
| Lease type | Who pays taxes, insurance and CAM | Common for |
|---|---|---|
| Triple net (NNN) | Tenant pays its share on top of base rent | Warehouse, flex, retail, single-tenant net lease investments |
| Modified gross | Split: some costs in the rent, some passed through | Small-bay industrial, some office |
| Full-service gross | Landlord pays, built into the rent | Multi-tenant office buildings |
What Tenants Should Negotiate in a NNN Lease
- A cap on controllable CAM increases, so maintenance charges can’t jump year to year
- Exclusions from CAM such as capital improvements, roof replacement, the landlord’s legal fees, and leasing commissions
- Roof and structure responsibility. In many Broward warehouse leases the landlord keeps the roof and structure; make sure the lease says so.
- HVAC. Who replaces the unit if it fails, not just who maintains it
- Audit rights, so you can review the annual CAM reconciliation
What Landlords Should Know
For owners, a well-written NNN lease protects net operating income from rising taxes and insurance. That matters in Florida, where insurance costs have climbed. It also makes the property more valuable to investors when you sell.
Single-Tenant NNN Investments
Investors also use “NNN” for single-tenant net lease properties, such as a fast-food restaurant, pharmacy or auto parts store. The tenant pays nearly all expenses, so the owner collects close to passive income. They’re popular with 1031 exchange buyers.
Does Florida Charge Sales Tax on Commercial Rent?
Not anymore. Florida eliminated its state sales tax on commercial rent effective October 1, 2024. Older leases and quotes may still reference it.
Get Help With Your Lease
Whether you’re a tenant comparing warehouse spaces or a landlord drafting lease terms, Adam Docktor can walk you through total occupancy cost and negotiate the terms that matter. See warehouse for rent and tenant representation.
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Call or Text 954-610-0440 Email [email protected]This article is general information, not legal or tax advice. Have your attorney review any lease before you sign.
