Net Lease: Definitions, Structures, and a Worked Example

A net lease is a lease structure where the tenant, not the landlord, covers some or all of a property’s operating expenses on top of base rent. That single distinction, who pays taxes, insurance, and maintenance, separates net leases from gross leases. It also drives most of the rent-comparison confusion practitioners hit when underwriting a deal.

What Is a Net Lease?

A net lease requires the tenant to pay a portion of the property’s operating costs in addition to base rent. Those costs typically fall into three categories: property taxes, insurance, and common area maintenance (CAM). How many of those three categories the tenant absorbs determines whether the lease is single net, double net, or triple net.

Net leases exist on a spectrum. At one end sits the modified gross lease, where the landlord absorbs most costs and the tenant covers a few usage-based items. At the other end sits the triple net (NNN) lease, where the tenant pays nearly every operating cost tied to the property.

Key Takeaway: A net lease shifts operating-expense risk from landlord to tenant. The more “nets” in the lease name, single, double, or triple, the more categories of cost the tenant assumes. Base rent in a net lease is almost always lower than the equivalent gross rent, because the landlord isn’t pricing in the same expense exposure.

Net Lease Types: Single, Double, and Triple Net Explained

A triple net lease is the version of a net lease in which the tenant pays base rent plus property taxes, insurance, and CAM, leaving the landlord responsible mainly for structural items. Single and double net leases split those three categories differently between landlord and tenant.

Lease Type	Landlord Typically Pays	Tenant Typically Pays	Common Use
Gross (Full-Service)	Taxes, insurance, CAM, most operating costs	Base rent only	Multi-tenant office
Modified Gross	Base building operating costs	Base rent plus specified items (utilities, janitorial)	Office, some retail
Single Net (N)	Insurance, CAM, structural maintenance	Base rent plus property taxes	Some retail and industrial
Double Net (NN)	CAM, structural/roof maintenance	Base rent plus taxes and insurance	Industrial, freestanding retail
Triple Net (NNN)	Structural/roof maintenance (negotiated)	Base rent plus taxes, insurance, and CAM	Single-tenant industrial, freestanding retail

Triple net leases aren’t one fixed contract. Lease language varies on whether the landlord retains roof and structure obligations or passes them along too. Reviewing the actual expense clauses matters more than relying on the “NNN” label alone.

Net Lease vs Gross Lease: What’s the Difference

The core difference between a gross lease and a net lease is who pays operating expenses. A gross lease bundles taxes, insurance, and CAM into one all-in rent paid by the tenant to the landlord. A net lease unbundles those costs, billing some or all of them to the tenant separately, on top of a typically lower base rent.

This distinction matters most when comparing headline rents across deals. A $30/SF gross rent and a $22/SF triple net rent aren’t directly comparable until you gross up the NNN figure by the tenant’s actual tax, insurance, and CAM obligations. Investors and brokers who skip that step routinely misjudge which deal is actually cheaper for the tenant, or more valuable to the landlord.

For investors, the practical takeaway is straightforward: a net lease transfers expense volatility, like rising property taxes or surging insurance premiums, off the landlord’s income statement and onto the tenant’s. That’s part of why net-leased assets, especially single-tenant net lease properties, tend to trade at different cap rates than comparable gross-leased buildings with similar in-place rent.

Single-Tenant Triple Net Leases in Industrial CRE

A single-tenant triple net (STNL) lease covers an entire building occupied by one tenant under a triple net structure. In industrial real estate, it commands a measurable rent premium over comparable non-STNL space. CompStak’s lease-level data shows that premium has widened over the current cycle.

Per CompStak’s 2026 Biannual Industrial Market Overview — Part Three, the STNL starting-rent premium over non-STNL held above 5% for four straight quarters, reaching 5.6% in Q1 2026.

Metric	STNL	Non-STNL
Starting rent, Q1 2026	$11.46/SF	$10.85/SF
Premium over non-STNL	5.6%	—
Rent growth since Q1 2019	93.3%	76.1%

STNL rents grew 93.3% since Q1 2019, compared with 76.1% for non-STNL industrial space over the same period. That gap suggests single-tenant net lease assets, which trade heavily among net-lease-focused investors and 1031 buyers, have priced in a scarcity premium. It’s outpacing the broader industrial market. Nationally, the Columbia CompStak Rent Index (CCRI) for industrial reached $11.92/SF, up 3.9% year over year, as of May 2026. That’s a useful benchmark against which to gross up any specific STNL quote.

Source: CompStak’s 2026 Biannual Industrial Market Overview — Part Three; Columbia CompStak Rent Index (CCRI), developed with Columbia Business School. Data as of Q1 2026 and May 2026, respectively.

Common Misconceptions About Net Leases

“Triple net means the landlord pays nothing.” Most NNN leases still assign structural repairs, roof replacement, or major capital items to the landlord unless the lease specifically reassigns them. Read the expense clauses, not the label.

“Net lease and NNN lease are the same thing.” Net lease is the category. Single net, double net, and triple net are variations within it, each shifting a different combination of taxes, insurance, and CAM to the tenant.

“A gross lease is automatically cheaper for the tenant.” A gross lease bakes expected operating costs into the headline rent. A tenant comparing a gross quote against a net quote without normalizing for taxes, insurance, and CAM is comparing two different products.

“Triple net leases are only for retail.” Freestanding retail popularized the NNN structure, but it’s now standard for single-tenant industrial buildings, particularly bulk and STNL assets where landlords want predictable income with minimal expense exposure. The U.S. Bureau of Labor Statistics tracks longer-term trends in insurance and property-tax costs worth reviewing when underwriting a net lease’s expense risk.

Triple Net Lease Example: How the Math Works

Take a single-tenant industrial building leased under a triple net structure at CompStak’s national STNL starting rent of $11.46/SF, per the Part Three data above. Under a true NNN lease, the tenant pays that $11.46/SF base rent directly to the landlord. It then separately covers its full share of property taxes, insurance, and CAM, either billed by the landlord as pass-throughs or paid directly to the taxing authority and insurer.

The landlord’s net operating income lands close to the $11.46/SF base rent. The tenant carries the operating costs a landlord would otherwise absorb under a gross lease. Compare that against the non-STNL starting rent of $10.85/SF in the same dataset. The 5.6% premium reflects the market’s willingness to pay more for the certainty and simplicity of a single-tenant net lease, even after accounting for the tenant’s added expense obligations.

That’s the calculation practitioners should run every time: normalize the net rent by adding back estimated pass-throughs, then compare the grossed-up figure against a true gross-lease quote for the same asset class and market.

FAQ: Net Lease Questions Practitioners Ask