NNN Lease Calculator Formula

Understand the math behind the nnn lease calculator. Each variable explained with a worked example.

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Formulas Used

Monthly Total Occupancy Cost

monthly_total = total_annual / 12

Annual Total (Year 1)

annual_total = total_annual

All-In Cost Per Sq Ft

all_in_psf = total_all_in_per_sqft

Annual NNN Charges

annual_nnn = annual_nnn_charges

Monthly Base Rent

monthly_base = annual_base / 12

Total Base Rent Over Lease

total_lease_cost = total_lease_base

Variables

VariableDescriptionDefault
rentable_sqftRentable Square Feet(sq ft)3000
base_rent_per_sqftBase Rent (per sq ft/year)(USD)22
cam_per_sqftCAM Charges (per sq ft/year)(USD)6.5
tax_per_sqftProperty Tax (per sq ft/year)(USD)4.25
insurance_per_sqftInsurance (per sq ft/year)(USD)1.75
lease_term_yearsLease Term (years)5
annual_escalation_pctAnnual Base Rent Escalation(%)3
annual_baseDerived value= rentable_sqft * base_rent_per_sqftcalculated
annual_camDerived value= rentable_sqft * cam_per_sqftcalculated
annual_taxDerived value= rentable_sqft * tax_per_sqftcalculated
annual_insuranceDerived value= rentable_sqft * insurance_per_sqftcalculated
annual_nnn_chargesDerived value= annual_cam + annual_tax + annual_insurancecalculated
total_annualDerived value= annual_base + annual_nnn_chargescalculated
total_all_in_per_sqftDerived value= base_rent_per_sqft + cam_per_sqft + tax_per_sqft + insurance_per_sqftcalculated
total_lease_baseDerived value= annual_escalation_pct > 0 ? annual_base * ((pow(1 + annual_escalation_pct / 100, lease_term_years) - 1) / (annual_escalation_pct / 100)) : annual_base * lease_term_yearscalculated

How It Works

Understanding NNN (Triple Net) Leases

In a triple net lease, the tenant pays base rent plus their proportionate share of property taxes, insurance, and common area maintenance (CAM). This is the most common lease structure in commercial real estate.

Components

  • Base Rent: The fundamental lease payment, typically quoted per square foot per year
  • CAM (Common Area Maintenance): Landscaping, parking lot maintenance, common area utilities, cleaning, security
  • Property Tax: Tenant's proportionate share of the property tax bill
  • Insurance: Tenant's share of the building insurance premium

    • NNN vs. Gross Lease

  • NNN: Tenant pays base + all operating expenses separately (landlord risk is lower)
  • Modified Gross: Tenant pays base rent with some expenses included
  • Full Gross: One all-inclusive payment (landlord bears expense risk)

    • Escalation Clauses

    Most NNN leases include annual base rent escalations of 2-4% to keep pace with inflation. NNN charges adjust based on actual costs each year.

    Worked Example

    3,000 sq ft office at $22/sq ft base rent, $6.50 CAM, $4.25 tax, $1.75 insurance, 5-year term with 3% annual escalation.

    rentable_sqft = 3000base_rent_per_sqft = 22cam_per_sqft = 6.5tax_per_sqft = 4.25insurance_per_sqft = 1.75lease_term_years = 5annual_escalation_pct = 3
    1. 01Annual base rent: 3,000 x $22 = $66,000
    2. 02Annual CAM: 3,000 x $6.50 = $19,500
    3. 03Annual tax: 3,000 x $4.25 = $12,750
    4. 04Annual insurance: 3,000 x $1.75 = $5,250
    5. 05Total NNN charges: $19,500 + $12,750 + $5,250 = $37,500
    6. 06Year 1 total: $66,000 + $37,500 = $103,500
    7. 07Monthly total: $103,500 / 12 = $8,625
    8. 08All-in per sq ft: $22 + $6.50 + $4.25 + $1.75 = $34.50

    Frequently Asked Questions

    What is included in CAM charges?

    CAM typically covers landscaping, snow removal, parking lot maintenance and lighting, common area cleaning and utilities, property management fees, security, and building exterior maintenance. Some leases cap CAM increases to protect tenants from unexpected spikes.

    How are NNN charges calculated for each tenant?

    Each tenant pays their proportionate share based on their rentable square footage relative to the total building square footage. If you lease 3,000 of 30,000 total sq ft, you pay 10% of the total NNN charges.

    Can NNN charges increase significantly?

    Yes. Property taxes can increase after reassessment, insurance premiums can spike, and CAM costs rise with inflation. Smart tenants negotiate CAM caps, audit rights, and exclusions for capital expenditures to limit their exposure.

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