Triple Net Lease (NNN)
A triple net (NNN) lease is a commercial real estate lease structure where the tenant pays base rent PLUS the property's three nets: real estate taxes, building insurance, and maintenance expenses. The landlord receives essentially passive income with minimal property management responsibility.
NNN is the dominant lease structure for single-tenant commercial real estate investments. National retail brands — Dollar General, Walgreens, McDonald's, AutoZone, Wawa, Starbucks — typically lease on a NNN basis with corporate guarantees and lease terms of 10–20 years. NNN-leased properties are the most popular Florida 1031 exchange replacement vehicle and one of the most accessible categories of passive commercial real estate investment.
The Three Nets
- Property Taxes — Real estate ad valorem taxes assessed by the county/municipality.
- Property Insurance — Building hazard insurance (in Florida, including hurricane/wind coverage).
- Maintenance & Repairs — All ongoing maintenance and repair costs of the property.
NNN vs. Other Lease Structures
- Gross Lease (Full Service): Landlord pays everything; tenant pays only base rent. Common in office.
- Modified Gross: Tenant pays some expenses (often utilities and janitorial); landlord pays others. Common in office.
- Single Net (N): Tenant pays one of the three nets (usually property taxes).
- Double Net (NN): Tenant pays two of the three nets (taxes + insurance).
- Triple Net (NNN): Tenant pays all three nets. The most passive structure for the landlord.
- Absolute Net: Even more passive than NNN — tenant also responsible for roof, structure, and parking. Often used with corporate credit tenants.
Why NNN Is Popular with Florida Investors
NNN-leased properties offer several advantages that make them especially attractive to Florida CRE investors:
- Passive income with minimal landlord responsibility
- Long-term predictability — leases typically 10–20 years with renewal options
- Corporate credit guarantees from national tenants
- Florida tax advantages — no state income tax
- 1031 exchange friendly — easy identification and acquisition within the 45/180 day windows
- Out-of-state ownership-friendly — no need for local property management
Common NNN Tenant Categories
- Dollar Stores: Dollar General, Dollar Tree, Family Dollar
- Pharmacies: Walgreens, CVS
- Quick-Service Restaurants: McDonald's, Starbucks, Chick-fil-A, Taco Bell
- Convenience Stores: 7-Eleven, Wawa, Circle K, RaceTrac
- Auto Parts/Service: AutoZone, O'Reilly, Take 5 Oil Change
- Medical: DaVita, Fresenius dialysis, urgent care
- Grocery: Publix (Florida-dominant), Aldi, Trader Joe's
Frequently Asked Questions
What is the difference between a NNN lease and an absolute net lease?
In a NNN lease the tenant pays property taxes, insurance, and maintenance, but the landlord typically retains some responsibility for major capital items like roof and structure. In an absolute net lease the tenant is responsible for everything including roof, structure, and parking. Absolute net is the most passive form of net lease ownership.
Are NNN properties good for 1031 exchanges?
NNN properties are the single most popular 1031 exchange replacement vehicle in Florida. Long lease terms, corporate credit guarantees, passive ownership, and predictable income make them ideal for investors transitioning from management-intensive properties. Florida's no-state-capital-gains-tax further amplifies the advantage.
What cap rates do Florida NNN properties trade at?
Investment-grade credit tenants (Walgreens, McDonald's corporate, Chick-fil-A) with 15+ year leases trade at 5.0–5.75%. Strong franchisee deals trade at 5.5–6.5%. Mid-tier credit with shorter leases trade at 6.25–7.5%. Lower-credit franchisees or older leases trade at 7.0–8.5%.
How do I buy a NNN property in Florida?
Michael R. Linton at Linton Global Solutions maintains active Florida NNN inventory across all tenant categories — both on-market and off-market opportunities. He also coordinates 1031 exchange execution including QI selection and 45/180 day timing. Call (312) 612-1031.
Looking for Florida NNN Inventory?
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