Triple nets refer to three monthly expenses tenants must account for beyond base rent. Tenants often overlook this added (and often significant) expense when planning their gross monthly rent. It is common to only look at the base rent and overlook this often very large expense. In some cases, triple nets can cost as much as your base rent.
Triple nets, commonly referred to as NNN or Operating Expenses on leases, are the expenses tenants pay on top of base rent: taxes, insurance, and common area maintenance.
Triple nets are calculated per square foot. In the Boulder area, they can be around $3/square foot for an industrial space and $10-12/square foot for an office or retail space. Downtown, it may be even more. And in Boulder, with high property taxes, the most expensive “net” is always taxes. Included in the “maintenance net” may be services for snow removal, gardening, common hallway and bathroom cleaning, and general maintenance.
Triple nets are reconciled annually. Around January or February your landlord will reconcile the year of expenses. If you underpaid you will owe, but if you overpaid you will receive a credit. In most circumstances, you will owe, so plan for it to be safe. The costs serve to cover – or “net out” – the landlord’s tax, insurance, and maintenance expenses on the space you are renting.
For tenants seeking a new property, it is important to include this cost into your budget. Do you have questions about your triple nets? Looking to make a move? We are here to help!