When it comes to commercial real estate leasing, few structures are as commonly used—and as misunderstood—as the Triple Net (NNN) lease. For property owners, NNN leases can offer reliable, passive income. For tenants, they provide long-term occupancy security and often more control over a space. But the real value of this lease structure lies in its details, and understanding how it functions in practice is key to making informed, profitable decisions—whether you’re leasing out a strip mall in Mesa or opening a retail location in downtown Phoenix.

In this guide, we’ll explain what Triple Net leases are, how they differ from other lease types, their pros and cons for both parties, and what landlords and tenants in Arizona should consider when entering into one.

What Is a Triple Net (NNN) Lease?

A Triple Net (NNN) lease is a type of commercial lease agreement in which the tenant agrees to pay, in addition to rent, the property’s operating expenses. These typically include:

1. Property Taxes

2. Property Insurance

3. Maintenance Costs

This “net-net-net” arrangement shifts much of the financial responsibility from the property owner to the tenant, making it a popular choice for landlords looking to reduce their operational involvement. It is widely used in retail, medical, office, and even some industrial leases throughout Arizona.

For example, if you own a retail building leased to a national chain on a Triple Net basis, that tenant is responsible for maintaining the property, paying annual taxes, and securing insurance—on top of their agreed-upon base rent.

How NNN Leases Differ from Other Lease Types

In commercial real estate, there are several common lease structures, including:

• Gross Lease: The landlord pays for all or most expenses, and the tenant pays a single lump-sum rent.

• Modified Gross Lease: Some expenses are split between tenant and landlord.

• Net Leases: Tenants pay one or more categories of expenses.

A Triple Net lease is the most tenant-responsible version, as all three major costs are passed on. In contrast, a Single Net Lease (N) might only require the tenant to pay property taxes, and a Double Net Lease (NN) adds insurance but leaves maintenance with the landlord.

The Advantages of NNN Leases for Property Owners

1. Predictable Income: With most variable expenses passed to the tenant, landlords enjoy consistent income without surprise maintenance or tax increases eroding returns.

2. Lower Management Burden: Especially attractive for investors seeking passive income, NNN leases often require little to no active property management—ideal for out-of-state owners or those with multiple holdings.

3. Attractive to Creditworthy Tenants: National chains, medical practices, and government agencies often prefer NNN leases because of the control and long-term stability they provide.

4. Stronger Resale Value: A property leased to a reliable tenant under a long-term NNN lease is highly desirable to other investors, especially in high-demand areas like Phoenix, Scottsdale, or Chandler.

What Tenants Should Know Before Signing a NNN Lease

While tenants gain full operational control over the property, they must also understand the significant responsibilities they are taking on. These include:

1. Paying Variable Costs: Taxes, insurance premiums, and maintenance costs can fluctuate. Tenants need to plan for increases and negotiate caps where possible.

2. Maintenance and Upkeep: Tenants are typically responsible for repairs, landscaping, trash removal, and sometimes even roof or HVAC maintenance—depending on lease terms.

3. Due Diligence Is Critical: Before signing, tenants must inspect the property thoroughly. If the roof is old or plumbing is outdated, you may inherit large repair bills down the road.

4. Audit Clauses and Reconciliations: Tenants should ensure the lease includes transparency clauses around expenses, particularly when leasing in multi-tenant buildings with common areas.

Key Lease Clauses to Watch For in Arizona Markets

Whether you’re a property owner or tenant in Phoenix or surrounding cities like Gilbert or Glendale, it’s important to pay attention to the details. Some crucial elements to look for include:

• CAM Charges (Common Area Maintenance): These cover costs shared between tenants in multi-unit buildings—think parking lot paving or lobby cleaning. Ensure clear accounting practices are in place.

• Roof and Structure Responsibility: Arizona’s hot summers and monsoon seasons can be tough on buildings. Clearly define who handles structural issues and at what cost.

• Insurance Requirements: Make sure the lease stipulates what kind of coverage is needed, who provides it, and who is named as insured. In Arizona, liability from slip-and-fall incidents on hot pavement is not uncommon.

• Property Tax Escalations: Some NNN leases include tax escalation clauses based on reassessments. Be sure you understand how these increases are calculated and when they take effect.

Popular Use Cases for NNN Leases in Phoenix and Beyond

Triple Net leases are most commonly used in the following types of properties:

• Retail Spaces: Including big-box stores, drive-thrus, and strip centers.

• Medical Offices: With long lease terms and tenants who invest heavily in tenant improvements.

• Freestanding Fast-Food Chains: In high-traffic areas such as along Camelback Road or Scottsdale’s main corridors.

• Franchise Businesses: Such as auto parts stores, convenience chains, or pharmacies.

Because Arizona continues to attract businesses and residents alike, commercial properties in areas like Tempe, Peoria, and Paradise Valley are increasingly being structured as NNN to meet investor demand.

Red Flags to Avoid in NNN Lease Agreements

Not all NNN leases are created equal. Landlords and tenants alike should be cautious of:

• Uncapped CAM Fees: Tenants may face unexpected annual hikes if there’s no ceiling on common area expenses.

• Ambiguous Maintenance Terms: Vague language can lead to disputes about who’s responsible for major repairs.

• Overloaded Tenant Obligations: Some leases attempt to shift all liability to the tenant, including issues that should be structural or capital improvements.

Working with Professionals for NNN Lease Success

Whether you’re drafting, negotiating, or reviewing a Triple Net lease, working with experienced professionals is essential. This includes:

• Real Estate Attorneys: To ensure the lease is legally sound and favorable.

• Commercial Brokers: Like those at Bellagio Real Estate, who can help match tenants with appropriate spaces and structure deals that protect both sides.

• Property Managers: If you’re managing multiple tenants or complex expenses, professional oversight ensures transparency and compliance.

How Bellagio Real Estate Helps You Navigate NNN Leases

At Bellagio Real Estate, we specialize in commercial leasing and investment strategies tailored to the Phoenix metropolitan area. Our team helps both property owners and business tenants structure lease agreements that are transparent, equitable, and aligned with your long-term goals.

We provide hands-on support through every step—from market analysis and tenant screening to lease negotiation and ongoing property oversight. With decades of combined experience in Arizona’s commercial real estate market, we know how to identify risks before they become problems—and how to seize the opportunities that Triple Net leases can provide.

Start Your Next Commercial Lease with Confidence

Whether you’re leasing out a property or looking to move your business into a new space, understanding the mechanics of a Triple Net lease can give you the upper hand. Let the team at Bellagio Real Estate guide you through the process with expertise, clarity, and a commitment to your success.

Call us today at (602) 427-5653 to speak with a commercial real estate specialist. We’re ready to help you maximize the value of your investments across Phoenix and beyond.