What is a triple net lease (NNN)?
A commercial lease structure in which the tenant pays base rent and is responsible for all three net costs: property taxes, building insurance, and maintenance expenses.
In a triple net lease (NNN), the tenant assumes financial responsibility for rent and three major operating costs: property taxes, insurance, and building maintenance. This structure differs sharply from a gross lease, where the landlord covers these expenses and passes the total cost to the tenant through a higher base rent.
NNN leases are prevalent in London, Ontario's commercial retail sectors. A tenant occupying retail space in a shopping centre or standalone commercial property would pay their monthly rent to the landlord, then also cover their proportional share of property taxes levied by the City, insurance premiums for liability and property protection, and routine maintenance or repairs to common areas and building systems. Some agreements specify which party handles capital improvements, creating important distinctions in long-term expense exposure.
Landlords favour NNN structures because operating costs are predictable and borne by the occupant. Tenants benefit from knowing their exact rent payment while accepting the trade-off of handling variable costs tied to local tax assessments, insurance markets, and repair needs. For retail operators, this lease type is standard, making it essential to understand before signing. Commercial real estate agents in the area can clarify which costs fall to you and which remain the landlord's obligation, as lease language varies.