No. A triple net lease does not include utilities. The three “nets” cover property taxes, building insurance, and common area maintenance, and utilities for your own space sit outside all three. You pay for electricity, water, gas, sewer, trash, internet, and phone on top of your base rent and your share of the NNN charges.
Why Utilities Fall Outside the Three Nets
Each “net” in an NNN lease represents a category of property expense the landlord shifts to the tenant:
- Property taxes. You pay your proportionate share of the annual real estate tax assessment. The amount can move year to year as assessments change.
- Building insurance. The landlord usually arranges the policy on the structure and bills you back for the premium.
- Common area maintenance (CAM). You pay a share of the costs of maintaining shared spaces: parking lots, lobbies, hallways, landscaping, security, snow removal, and the utilities that serve common areas.
Your share of each is normally based on the percentage of leasable square footage your unit occupies. Lease 2,000 square feet in a 20,000-square-foot building and you typically owe 10% of each shared cost. That split should be spelled out in the lease.
Utilities for your own suite are a separate category. A restaurant and an accounting firm in the same building draw wildly different amounts of electricity and water, so tying utility costs to actual consumption keeps each tenant paying for what they use rather than subsidizing a neighbor.
How Utilities Get Billed Under an NNN Lease
The mechanics depend on how the building is metered.
Individually Metered Suites
When your unit has its own meters, you set up accounts directly with each utility provider. Bills reflect your actual usage and go straight to you. This is the cleanest arrangement because no one is allocating anything on your behalf.
Master-Metered Buildings
Older or smaller multi-tenant buildings sometimes have a single master meter for the whole property. The landlord pays the utility bill and allocates the cost among tenants. Common allocation methods include splitting by square footage, splitting by number of tenants, or using submetering equipment that tracks each unit’s actual draw behind the master meter.
Several states regulate how landlords can allocate master-metered utility costs, including limits on markups. Your lease should state which method applies to your building. If it doesn’t, ask before you sign.
Submetered Buildings
Submetering has become more common because it delivers the accuracy of individual metering without the utility company having to run separate service lines. A third-party submetering company installs meters inside the building and bills each tenant based on real usage. If your building uses this setup, confirm whether the submetering company adds an administrative fee on top of the actual utility cost.
Common Area Utilities
Not every utility bill is yours alone. The electricity for parking lot lighting, lobby HVAC, and shared hallways is generally rolled into CAM rather than billed to individual tenants. That means you still pay a share through your NNN charges; it just arrives in a different line item.
What to Check in Your Lease Before Signing
The general rules above describe how NNN leases typically work, but the document you sign controls. Read the sections labeled “Operating Expenses,” “Additional Rent,” “Utilities,” and “Tenant Responsibilities” with these questions in mind:
- Which utilities are your responsibility? The lease should list them specifically. Do not assume anything is included just because it goes unmentioned.
- How are shared utility costs allocated? For a master-metered building, the allocation formula should be stated, along with whether the landlord is permitted to charge a markup.
- Which utilities are inside CAM? Common area utilities for lobbies, lot lighting, and shared HVAC often appear in CAM rather than on a separate bill.
- What happens if rates spike? Some leases address rate increases or utility shortages. Others are silent, which leaves the exposure with you.
If any utility language is ambiguous, get it clarified in writing before you sign. A short conversation with a commercial real estate attorney is cheaper than discovering an unexpected obligation six months into a five-year lease.
The Full Cost of Occupying an NNN Space
The advertised rent on an NNN listing is only one of four numbers you will actually pay each month: base rent, your tax share, your insurance share, your CAM share, and utilities on top. A space listed at $18 per square foot NNN can easily land above $25 per square foot once the three nets and utilities are added, depending on the property.
Ask the landlord for estimated NNN charges per square foot before you compare properties. These estimates come from the prior year’s actual expenses and give you a reasonable baseline, though actual costs will differ.
For utilities specifically, costs track your type of business, local rates, and the building’s energy efficiency. A retail shop in a well-insulated newer building will spend far less on electricity than a restaurant in an older structure with poor HVAC. Ask the landlord or the prior tenant for historical utility bills. Most utility companies will also release usage history for a commercial address on request.
Cap What You Can
You cannot easily cap your tax or insurance exposure because those numbers are set by outside parties. You can negotiate a cap on controllable CAM expenses, which limits how much the landlord can increase controllable maintenance costs year over year. Caps of 3% to 5% annual increases are standard in many markets. Without one, maintenance spending can climb unchecked and your share rises with it.
Watch for management or administrative fees layered on top of actual operating expenses. These are sometimes calculated as a percentage of total operating costs. Confirm whether such a fee exists, how it is calculated, and whether it falls under the CAM cap.
What Happens If You Fall Behind on Utilities or NNN Charges
NNN charges are almost always classified as “additional rent” in commercial leases. That classification matters: nonpayment triggers the same default remedies as nonpayment of base rent. If you fall behind on your share of taxes, insurance, or CAM, the landlord can charge late fees, accelerate the remaining rent due under your lease, or pursue eviction.
Utility nonpayment is a different problem with a similar edge. When you pay the utility company directly, the company can disconnect service after its own notice and cure procedures. Losing electricity or water can force you to close, and reconnection fees stack onto what you already owe. When utilities are master-metered and the landlord pays the bill, your failure to reimburse the landlord is again treated as unpaid additional rent, with the same default consequences.
Most commercial leases include a grace period, but those windows are often shorter than tenants expect. Check your cure period and late fee provisions before you need them.