What the three nets actually cover
Property taxes: the tenant reimburses its pro-rata share of the real property tax bill. In Texas this is often the single largest net charge, and it can move meaningfully after a reassessment or a sale.
Insurance: the landlord's property and liability coverage on the building, reimbursed by tenants. This is separate from the tenant's own contents and liability policies.
Common area maintenance: parking lot upkeep, landscaping, lighting, exterior cleaning, management fees and similar shared costs.
NNN versus gross and modified gross
In a full-service or gross lease, one rent number covers operating expenses; the landlord absorbs increases, and the quoted rate looks higher as a result. Office space is often quoted this way.
Modified gross splits the difference — some expenses are included, others are passed through. Read which is which rather than trusting the label.
NNN quotes look cheapest on paper because the nets sit outside the number. Always ask for the current estimated net charges per square foot before you compare deals.
What tenants should negotiate
Ask for a cap on controllable CAM increases year over year. Taxes and insurance are usually excluded from caps, but management fees and maintenance often are not.
Require an annual reconciliation with backup documentation and the right to audit. Ambiguous CAM language is where budgets get broken.
Push to exclude capital replacements — a roof or parking lot reconstruction — or at minimum require them to be amortized over their useful life rather than expensed in one year.
What NNN means for investors
Because operating costs pass through to tenants, NNN assets deliver more predictable net operating income, which is why single-tenant net-leased property trades on credit quality and lease term as much as on real estate fundamentals.
Diligence should focus on the actual lease document: who really pays for roof and structure, what happens at renewal, and whether the rent is above or below market if the tenant leaves.