Triple Net (NNN) vs Modified Gross Lease Calculator
Compare triple net (NNN) lease vs modified gross (MG) lease cashflow for commercial real estate. Effective rent, operating expense pass-through.
| NNN base rent | — |
| NNN pass-through | — |
| NNN total | — |
| MG total | — |
| Per-SF comparison | — |
Commercial leases come in two main flavors: NNN (triple net) where tenant pays base rent + property taxes + insurance + CAM separately; modified gross (MG) where one all-inclusive rent rolls up most expenses. NNN is common for retail/single-tenant; MG dominates office.
NNN Lease Structure
Tenant pays base rent + pro-rata share of: (N1) property tax, (N2) building insurance, (N3) common area maintenance (CAM). True triple net = tenant pays 100% of operating costs. Pass-through reconciled annually with actual expenses. Common in single-tenant retail (Walgreens, fast food).
Modified Gross Lease
Landlord rolls expected expenses into base rent. Tenant pays one all-inclusive rate. Sometimes 'base year stop' — tenant only pays escalation above base year expenses. Provides cost certainty for tenant, risk for landlord.
Effective Rent Comparison
Always compare on effective rent psf (total annual cost / square footage). NNN $24 base + $8 pass-through = $32 effective psf. Modified gross $30 effective psf = cheaper. But MG escalation can match or exceed NNN over time.
Risk Allocation
NNN puts variable expense risk on tenant (tax assessments, CAM increases, insurance hikes). MG puts that risk on landlord. Investor pricing reflects: NNN cap rates lower (less risk), MG cap rates higher (more risk).
Last updated May 2026. Sources: BOMA Standards, ICSC Retail Standards.