--- title: Can You Negotiate a Triple Net Lease? description: Since these are long-term lease agreements that often have rental increases baked in, tenants should strive to negotiate the most favorable lease terms with their landlords before putting ink to paper. image: https://www.realized1031.com/hubfs/what%20happens%20at%20the%20end%20of%20a%20ground%20lease%3F-1158130430.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Can You Negotiate a Triple Net Lease? Posted Feb 27, 2023 ![what happens at the end of a ground lease?-1158130430](https://www.realized1031.com/hs-fs/hubfs/what%20happens%20at%20the%20end%20of%20a%20ground%20lease%3F-1158130430.jpg?width=750&height=392&name=what%20happens%20at%20the%20end%20of%20a%20ground%20lease%3F-1158130430.jpg) Triple net leases may be appealing to some real estate investors because the tenant agrees to do most of the heavy lifting under this type of lease structure.  In a triple net lease – also referred to as an NNN lease agreement – the tenant shoulders the burden for all the routine expenses associated with operating the leased property. These expenses include maintenance, property taxes, and building insurance, along with utilities and monthly rent. Shifting these responsibilities from landlord to tenant can significantly reduce the time and risk associated with managing and owning the investment property.  One tradeoff, though, is that tenants who agree to triple net leases usually pay lower monthly rental payments than in other common lease structures, such as single or double net leases. Tenants who sign NNN leases typically agree to 5- or 10-year terms, though NNN leases can last much longer. Since these are long-term lease agreements that often have rental increases baked in, tenants should strive to negotiate the most favorable lease terms with their landlords before putting ink to paper.  ### Negotiating a Triple Net Lease: Tenant Side  Chances are, your landlord prefers a triple net lease since there are many potential benefits to the lease structure that tend to favor the landlord. These include lower investment costs since the tenant agrees to pay for expenses related to common maintenance and upkeep, and the fact that any future increases in operating costs can be passed on to the tenant. The longer length of these types of leases also can reduce investment risk for property owners.  Triple net lease tenants are often some of the most-frequented retail destinations, such as grocery stores, gyms, national chain coffee shops and restaurants, gas stations, and discount or convenience stores, to name just a few. Landlords may offer a variety of the following lease concessions upfront in order to lure or retain creditworthy NNN lease tenants:  - Discounted rent and short-term rental abatements  - Tenant improvement allowance  - Lower percentages of annual rent increases  - Lease extension and renewal options  - Rights to building signage and parking requirements  Tenants may wish to negotiate directly with their landlords, or they can engage the services of a commercial real estate broker who specializes in retail property lease negotiations. The former may prove less costly upfront since you won’t have to pay any broker commissions or fees, but you may not be able to secure as favorable lease terms as an accredited professional who does this very thing each and every workday. Besides, your landlord may have a leasing broker representing them in lease negotiations, so it could be beneficial to tenants to level the playing field with professional representation.    One way tenants can possibly skew the balance in their favor at the negotiating table is to demonstrate their creditworthiness as a tenant. Be prepared to show your landlord several years of your businesses’ financial and banking statements. Another way to potentially increase your negotiating position is to focus on just one area of concessions, such as reduced monthly rent or asking for a larger tenant improvement allowance to build out or improve your space.    ### Negotiating a Triple Net Lease: Tenant Side  Landlords also may be asked to renegotiate the terms of a NNN lease even though there may be multiple years left on the lease arrangement.  Tenants can ask for a renegotiation of their lease for multiple reasons – the pandemic is just one example where some retail tenants renegotiated lease agreements to include short-term rent abatements following the government-mandated store closures.  Landlords should be prepared to go over their tenant’s financials on the specific NNN lease location that’s requesting renegotiation in order to understand why the request was generated and if renegotiation is legitimately warranted. Landlords have this right, regardless of whether the tenant is a mom-and-pop diner or an investment-grade corporate coffeehouse.  Perhaps the biggest thing to understand is whether any lease renegotiations will degrade your financial position in the investment. You’ll want to have legal counsel review any renegotiation requests, as well as review the details of any new lease agreements prior to either party signing. Although you don’t want to lose a good tenant, you should not cave if you feel lease renegotiations are not in your best interest.  One last item to note for landlords: If your property is financed, your lender must be a part of any renegotiation discussions. The rental income you are receiving is being used to pay your building loan, and any abatements or reductions in rent may affect your ability to service your debt.  ### Putting it all Together  Tenants can renegotiate triple net leases, and property owners may be asked to come to the negotiating table despite having a signed lease agreement in place. Professional representation in lease negotiations can serve both parties.  This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. 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These expenses include maintenance, property taxes, and building insurance, along with utilities and monthly rent. Shifting these responsibilities from landlord to tenant can significantly reduce the time and risk associated with managing and owning the investment property. One tradeoff, though, is that tenants who agree to triple net leases usually pay lower monthly rental payments than in other common lease structures, such as single or double net leases. Tenants who sign NNN leases typically agree to 5- or 10-year terms, though NNN leases can last much longer. Since these are long-term lease agreements that often have rental increases baked in, tenants should strive to negotiate the most favorable lease terms with their landlords before putting ink to paper. Negotiating a Triple Net Lease: Tenant Side Chances are, your landlord prefers a triple net lease since there are many potential benefits to the lease structure that tend to favor the landlord. These include lower investment costs since the tenant agrees to pay for expenses related to common maintenance and upkeep, and the fact that any future increases in operating costs can be passed on to the tenant. The longer length of these types of leases also can reduce investment risk for property owners. Triple net lease tenants are often some of the most-frequented retail destinations, such as grocery stores, gyms, national chain coffee shops and restaurants, gas stations, and discount or convenience stores, to name just a few. Landlords may offer a variety of the following lease concessions upfront in order to lure or retain creditworthy NNN lease tenants: Discounted rent and short-term rental abatements Tenant improvement allowance Lower percentages of annual rent increases Lease extension and renewal options Rights to building signage and parking requirements Tenants may wish to negotiate directly with their landlords, or they can engage the services of a commercial real estate broker who specializes in retail property lease negotiations. The former may prove less costly upfront since you won’t have to pay any broker commissions or fees, but you may not be able to secure as favorable lease terms as an accredited professional who does this very thing each and every workday. Besides, your landlord may have a leasing broker representing them in lease negotiations, so it could be beneficial to tenants to level the playing field with professional representation. One way tenants can possibly skew the balance in their favor at the negotiating table is to demonstrate their creditworthiness as a tenant. Be prepared to show your landlord several years of your businesses’ financial and banking statements. Another way to potentially increase your negotiating position is to focus on just one area of concessions, such as reduced monthly rent or asking for a larger tenant improvement allowance to build out or improve your space. Negotiating a Triple Net Lease: Tenant Side Landlords also may be asked to renegotiate the terms of a NNN lease even though there may be multiple years left on the lease arrangement. Tenants can ask for a renegotiation of their lease for multiple reasons – the pandemic is just one example where some retail tenants renegotiated lease agreements to include short-term rent abatements following the government-mandated store closures. Landlords should be prepared to go over their tenant’s financials on the specific NNN lease location that’s requesting renegotiation in order to understand why the request was generated and if renegotiation is legitimately warranted. Landlords have this right, regardless of whether the tenant is a mom-and-pop diner or an investment-grade corporate coffeehouse. Perhaps the biggest thing to understand is whether any lease renegotiations will degrade your financial position in the investment. You’ll want to have legal counsel review any renegotiation requests, as well as review the details of any new lease agreements prior to either party signing. Although you don’t want to lose a good tenant, you should not cave if you feel lease renegotiations are not in your best interest. One last item to note for landlords: If your property is financed, your lender must be a part of any renegotiation discussions. The rental income you are receiving is being used to pay your building loan, and any abatements or reductions in rent may affect your ability to service your debt. Putting it all Together Tenants can renegotiate triple net leases, and property owners may be asked to come to the negotiating table despite having a signed lease agreement in place. Professional representation in lease negotiations can serve both parties.", "articleSection" : [ "Net Lease" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-02-28T01:00:00+0000", "datePublished" : "2023-02-28T01:00:00+0000", "description" : "Since these are long-term lease agreements that often have rental increases baked in, tenants should strive to negotiate the most favorable lease terms with their landlords before putting ink to paper.", "headline" : "Can You Negotiate a Triple Net Lease?", "image" : { "@type" : "ImageObject", "height" : 392, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/what%20happens%20at%20the%20end%20of%20a%20ground%20lease%3F-1158130430.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/can-you-negotiate-a-triple-net-lease", "name" : "Can You Negotiate a Triple Net Lease?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/what%20happens%20at%20the%20end%20of%20a%20ground%20lease%3F-1158130430.jpg" } ```