The three nets
Property taxes
Your share of the building's property tax bill. Colorado property taxes have risen with values in recent years, and they can go up again when the property is reassessed or sold.
- Billed monthly as an estimate
- Trued up yearly
Insurance
Your share of the landlord's property insurance on the building. This is separate from your own business insurance, which you still need.
- Premiums can rise with hail claims
Common area maintenance (CAM)
Your share of parking lot repairs, snow removal, landscaping, lighting, common utilities, trash and property management. Some leases also pass through roof and structural costs.
- Read what is included and what is capped
How to figure your real monthly cost
Commercial rent is quoted per square foot per year. To get to a monthly number, add base rent and NNN, multiply by your square feet, and divide by 12.
| Per SF per year | Per year | Per month | |
|---|---|---|---|
| Base rent | $22.00 | $44,000 | $3,667 |
| NNN (taxes, insurance, CAM) | $9.00 | $18,000 | $1,500 |
| Total | $31.00 | $62,000 | $5,167 |
Example for a 2,000 square foot space. Ask for the building's actual NNN estimate and the last two years of reconciliations.
Other lease types
Gross or full service
- One rent that includes taxes, insurance and maintenance
- The landlord takes the risk of rising costs
- Often rises if costs go over a base year
Modified gross
- Some costs are included, some are passed through
- Read exactly which costs you pay
- Utilities and janitorial are often yours
Questions to ask before you sign
- What is the current NNN estimate per square foot?
- What were the actual NNN charges for the last two years?
- Is there a cap on how much controllable CAM can go up each year?
- Is a management or administrative fee added to CAM, and how much?
- Are roof, structure or parking lot replacements passed through?
- Can I review the landlord's records when the year is reconciled?
Common follow up questions
What is a NNN reconciliation?
Each year the landlord compares what tenants paid in monthly NNN estimates to the actual costs. If actual costs were higher, you get a bill. If they were lower, you get a credit.
Can I negotiate NNN charges?
You usually cannot negotiate the taxes or insurance, but you can often negotiate a cap on controllable CAM increases, limits on management fees, and exclusions for major capital repairs.
Is NNN the same as CAM?
No. CAM is one of the three nets. NNN is the total of property taxes, insurance and CAM together.
This page is general information, not lending, legal or tax advice. Programs, limits and terms change, and every situation is different. Talk with your lender, attorney and CPA before you decide.