NNN vs. Gross Leases: What Actually Changes?
Who pays the operating expenses changes the economics for both sides of the table.
Lease structures allocate the costs of operating a property between landlord and tenant. In retail, triple-net (NNN) structures are common, but they are not universal.
Triple-net
Under a typical NNN lease, the tenant pays base rent plus its share of property taxes, insurance, and common area maintenance. The landlord's income is more insulated from rising expenses.
Gross and modified gross
In a gross lease, the landlord covers most operating expenses out of a higher rent. Modified gross structures split the difference. The definitions vary by market and by lease — always read the actual language.
Examples are hypothetical and for education only. This article is not investment, legal, tax, or financial advice.
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