What is a checklist to evaluate a triple net lease?

Triple Net Lease is a commercial lease structure in which the tenant is responsible for paying property taxes, insurance, and maintenance costs in addition to base rent, shifting most operating expense responsibility from landlord to tenant.

How a Triple Net Lease Works

• The tenant pays base rent plus a proportional share of property taxes, building insurance, and maintenance costs.
• Landlords typically receive more predictable net income since operating expenses are passed through to tenants.
• Lease terms specify how expenses are calculated, billed, and reconciled between landlord and tenant.
• Triple net leases are common in single-tenant retail, industrial, and office properties.

Why Is a Triple Net Lease Important in Today's Market

• Provides landlords with more predictable income by shifting variable operating cost risk to tenants.
• Appeals to investors seeking stable, passive income streams from commercial real estate.
• Offers tenants greater control over property operations and maintenance decisions.
• Remains a widely used structure for single-tenant retail and industrial property investments.

Best Practices for Negotiating Triple Net Leases

• Clearly define which expenses are included and how they will be calculated and billed.
• Include audit rights allowing tenants to verify landlord expense pass-throughs.
• Assess the tenant's financial strength carefully, since income predictability depends on tenant reliability.
• Review long-term maintenance responsibilities to avoid disputes over major capital repairs.

Triple net leases remain a popular structure in commercial real estate, offering landlords predictable income while giving tenants greater operational control over their leased space.