When exploring commercial real estate in Calgary, one of the most common terms you’ll come across is the Triple Net Lease (often written as “NNN Lease”). Whether you’re a landlord or tenant, understanding what this lease structure means is crucial to budgeting, negotiations, and long-term business success.
This blog will explain what a triple net lease is, what costs it includes, and why it matters in Calgary’s commercial leasing market.
What is a Tripple Net Lease?
Simply put, a Triple Net Lease is a common lease format that requires tenants to pay property taxes, building insurance, and common area maintenence (CAM) in addition to base rent.
The deep dive:
What Is a Triple Net Lease?
A triple net lease (NNN lease) is a type of commercial lease where the tenant pays three major operating expenses in addition to their base rent:
1. Property taxes
2. Building Insurance
3. Common Area Maintenance (CAM) or Operating Costs
Because the tenant is covering these costs directly, the base rent in a triple net lease is usually lower compared to a gross lease. However, tenants must budget carefully for the “additional rent” portion of their lease, which can add significantly to the total rent paid. Click here to learn more about Additional Rent.
How Triple Net Lease Costs Work
- Base Rent: The fixed rent amount for occupying the space (e.g., $20 per sq. ft.).
- Additional Rent (NNN): Tenant’s share of property taxes, insurance, and maintenance. In Calgary, this is often quoted on a per-square-foot basis and can range between $12–$20 per sq. ft., depending on property type and location.
- Utilities: May or may not be included. In many Alberta leases, utilities are billed directly to tenants if separately metered.
At the end of each year, landlords reconcile the actual expenses against the estimates, and tenants may owe a small balance or receive a credit.
Example of Triple Net Lease in Calgary
Imagine leasing a 2,000 sq. ft. retail unit in Calgary:
- Base Rent: $20/sq. ft. × 2,000 = $40,000/year
- Additional Rent (NNN): $15/sq. ft. × 2,000 = $30,000/year
- Total Rent: $70,000/year (before utilities and GST)
This illustrates why it’s essential for tenants to consider both base rent and triple net costs when comparing spaces.
Why Triple Net Leases Are Common in Calgary
In Calgary—and across Canada—most commercial leases are structured as triple net leases. This is especially true for:
- Retail plazas and shopping centres
- Office buildings
- Industrial warehouses
The structure is preferred because it:
- Provides landlords with predictable net income.
- Encourages tenants to treat the property with care, since they share responsibility for upkeep.
- Offers transparency on operating expenses.
Pros and Cons of a Triple Net Lease
For Tenants
Pros:
- Lower base rent than gross leases
- Transparency on building expenses
- More control over operating costs (depending on landlord’s management)
Cons:
- Less predictable costs due to fluctuating taxes, insurance, and maintenance
- Responsibility for expenses beyond base rent
- Requires careful budgeting and review of annual reconciliations
For Landlords
Pros:
- Predictable net income
- Recovery of building maintenence and operating expenses from tenants
- More attractive property valuation for lenders/investors
Cons:
- Must provide accurate accounting of expenses
- Negotiations may take longer
Tips for Tenants Negotiating a Triple Net Lease
- Review CAM/Operating Costs Carefully: Understand what’s included and ensure exclusions for capital costs where possible.
- Ask for Historical Expenses: Past 2–3 years of operating cost statements help estimate future budgets.
- Clarify Utilities: Confirm whether utilities are billed as part of Additional Rent or directly to you.
- Watch for Administration Fees: Negotiate reasonable caps on management or admin fees.
- Engage a Commercial Real Estate Broker: Local experts can benchmark whether quoted Additional Rent is in line with Calgary market averages.
Key Takeaways
What does “triple net lease” mean in Calgary commercial real estate?
A triple net lease is when tenants pay property taxes, building insurance, and common area maintenance (CAM) in addition to base rent.
Why do landlords prefer Triple Net Leases?
Because it gives them predictable net income and shifts operating expenses to tenants.
How much is Additional Rent in Calgary?
It typically ranges from $12–$20 per sq. ft., depending on property type and services included.
By understanding how a triple net lease works, you’ll be better equipped to compare leasing opportunities, budget effectively, and negotiate terms that fit your business goals. Need help negotiating a Triple Net Lease and other commercial leases? Contact Leaseco Realty by clicking here and get in touch with experienced commercial real estate brokers.