What You Need to Know About NNN Leases in Nashville’s Evolving Market
The triple net lease—commonly known as the NNN lease—has long been a fixture in retail leasing. But over the past decade, Middle Tennessee has seen this lease structure increasingly adopted in newly constructed office and industrial buildings. As Nashville grows and modernizes its commercial real estate inventory, more landlords are opting for NNN leases, and more business owners are being asked to sign them.
If you own property or operate a business in this region, it’s essential to understand how a NNN lease works, what its advantages are, and what to watch for—whether you’re negotiating a lease or preparing to sell a NNN-leased asset.
What Is a NNN Lease?
A NNN lease is a lease agreement where the tenant agrees to pay three key expense categories in addition to base rent:
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Property taxes
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Building insurance
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Common area maintenance (CAM), which may include landscaping, parking lot repairs, management fees, and more.
In short, the tenant assumes the majority of the financial responsibility for the property’s ongoing costs—relieving the landlord of these obligations.
Why Landlords Like NNN Leases
For property owners, especially in a high-growth market like Nashville, the NNN lease structure offers several key benefits:
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Predictable cash flow: Base rent becomes true net income, with minimal operating cost surprises.
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Appealing to investors: Buyers of commercial property increasingly view long-term NNN leases as stable, passive income investments.
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Simplified ownership: Since the tenant handles expenses like taxes and insurance, managing a NNN property can be close to hands-off.
These advantages are especially attractive for landlords looking to scale their portfolios or prepare an asset for sale.
What Tenants Need to Watch For
For business owners, understanding the full picture of a NNN lease is essential. While base rent may seem attractive at first glance, it’s crucial to:
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Budget for total occupancy costs, which include pass-through expenses.
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Review historical expenses, such as prior year tax bills or CAM budgets.
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Evaluate the building’s condition, especially in older properties, to anticipate potential capital expenditures.
For example, a new HVAC system or roof replacement might not be clearly covered under a typical CAM structure. Knowing what you're responsible for—and what your landlord maintains—is critical.
Selling a Property with a NNN Lease
If you're a landlord considering selling a property with a NNN lease in place, you’re in a strong position—particularly if your tenant is stable, your lease term is long, and your expenses are truly passed through. These leases are highly attractive to private equity groups, REITs, and 1031 exchange buyers looking for passive income opportunities in growing markets like Nashville.
Let’s Talk
Whether you’re a landlord wanting to structure your property for long-term value, or a business owner reviewing your next lease, understanding the NNN lease model is key to protecting your financial interests.
I’d love to connect—whether it’s a property tour, coffee, or quick phone call. Let’s explore how this lease model may affect your next decision and what it means for your bottom line.
