NNN vs Gross Lease — 10-25 Year Commitments Worth Millions
Commercial leases are 10-25 year commitments. The difference between NNN and gross lease can be 30-40% of total occupancy cost. Compare lease structures and project total cost.
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NNN tenants pay 30-40% more than base rent when pass-throughs are included. TI allowance negotiations save tenants $10-30/sq ft. 3% annual or CPI-linked escalations are standard. Request historical CAM statements to verify landlord estimates.
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Why: Commercial leases are 10-25 year commitments worth millions. WeWork signed $47B in lease obligations before its IPO implosion. The difference between NNN and gross lease can be 30-40% of total occupancy cost. CAM charges add $5-15/sq ft annually.
How: Enter lease area, base rent, term, and lease type (NNN, gross, modified gross). Add operating expenses for NNN. Configure escalations and optional percentage rent for retail. The calculator shows total annual rent, effective rent, present value, and year-by-year breakdown.
Run the calculator when you are ready.
Sample Examples — Click to Load
Basic Lease Details
Operating Expenses ($/sq ft/yr)
Escalation
Percentage Rent (Retail)
Additional Costs
Monthly Cost Breakdown
Annual Escalation
NNN vs Gross Comparison ($/sq ft)
Cost per Sq Ft Analysis
Year-by-Year Breakdown
| Year | Annual Rent | Monthly | $/sq ft | Escalation |
|---|---|---|---|---|
| 1 | $190,000 | $15,833 | $38 | - |
| 2 | $195,700 | $16,308 | $39 | +$5,700 (3.00%) |
| 3 | $201,571 | $16,798 | $40 | +$5,871 (3.00%) |
| 4 | $207,618 | $17,302 | $42 | +$6,047 (3.00%) |
| 5 | $213,847 | $17,821 | $43 | +$6,229 (3.00%) |
For educational purposes only — not financial advice. Consult a qualified advisor before making decisions.
💡 Money Facts
WeWork had $47B in lease obligations before its IPO implosion
— WeWork S-1
Manhattan Class A office averages ~$75/sq ft
— CBRE
NNN tenants pay 30-40% more than base rent when pass-throughs are included
— JLL
Average US office vacancy: 18.6% post-COVID
— Cushman & Wakefield
TI allowance negotiations save tenants $10-30/sq ft
— BOMA
Lease escalations: 3% annual or CPI-linked are standard
— Industry
Commercial leases are 10-25 year commitments worth millions. The difference between NNN and gross lease can be 30-40% of total occupancy cost. WeWork signed $47B in lease obligations before its IPO implosion. This calculator compares lease structures and projects total occupancy cost.
Key Takeaways
- • NNN (Triple Net): tenant pays base rent + property tax + insurance + maintenance
- • Gross: landlord includes everything; rent is all-inclusive
- • CAM charges add $5-15/sq ft annually
- • Typical TI allowance: $30-80/sq ft for office
Did You Know?
How It Works
NNN vs Gross vs Modified Gross: NNN passes all operating costs to tenant; gross includes everything; modified gross splits some costs.
CAM Charges: Common Area Maintenance covers shared expenses (landscaping, parking, lobby). Often estimated and reconciled annually.
TI Allowance Negotiation: Landlord provides buildout funds. Negotiate $30-80/sq ft for office; retail may vary. Unused TI may be forfeited.
Escalation Clauses: Fixed 3% annual, CPI-linked, or stepped increases every 2-5 years. Escalations compound over long leases.
Expert Tips
Request historical CAM statements
Verify landlord estimates against prior years. CAM can spike unexpectedly.
Negotiate TI allowance upfront
TI negotiations save $10-30/sq ft. Push for natural breakpoint in retail percentage rent.
Lease Types
| Type | Who Pays OpEx |
|---|---|
| NNN (Triple Net) | Tenant pays tax, insurance, CAM, maintenance |
| Gross | Landlord pays all operating expenses |
| Modified Gross | Shared: landlord tax/insurance, tenant utilities/CAM |
| Percentage | Base + % of sales above breakpoint (retail) |
| Ground Lease | Tenant pays land rent; builds/owns improvements |
Frequently Asked Questions
What is a triple net (NNN) lease?
NNN (triple net) means the tenant pays base rent plus property taxes, insurance, and common area maintenance (CAM). The tenant bears virtually all operating costs. NNN tenants typically pay 30-40% more than base rent when all pass-throughs are included.
What is a gross lease vs modified gross?
Gross lease: landlord pays all operating expenses; rent is all-inclusive. Modified gross: landlord pays some expenses (e.g., property tax, insurance) while tenant pays others (utilities, CAM). It splits the burden between parties.
What are CAM charges in commercial leases?
CAM (Common Area Maintenance) covers shared costs: landscaping, parking lot maintenance, lobby cleaning, snow removal, etc. CAM charges typically add $5-15/sq ft annually. They are often estimated and reconciled annually.
What is a TI (tenant improvement) allowance?
TI allowance is money the landlord provides for buildout (walls, flooring, HVAC, etc.). Typical office TI: $30-80/sq ft. Negotiating TI can save tenants $10-30/sq ft. Unused TI may be forfeited or applied to rent abatement.
How do lease escalations work?
Escalations increase rent over time. Common types: (1) Fixed percentage (e.g., 3% annually), (2) CPI-linked (tied to inflation), (3) Stepped increases (predetermined bumps every 2-5 years). 3% annual or CPI-linked are standard in most markets.
What is percentage rent in retail leases?
Percentage rent requires tenants to pay additional rent based on gross sales above a breakpoint. Natural breakpoint = base rent ÷ percentage rate. Typical rates: 5-7% for retail. Only applies when sales exceed the breakpoint.
By the Numbers
Sources
- • CBRE — commercial real estate market data
- • JLL — NNN vs gross lease analysis
- • Cushman & Wakefield — office vacancy statistics
- • BOMA — TI allowance benchmarks
Disclaimer: This calculator provides estimates for educational purposes. Lease terms vary by market and negotiation. Consult a commercial real estate attorney or broker for your specific situation. Not legal or financial advice.
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