If you’re managing a business from a leased property, you’re likely juggling more than just rent. Between inventory, staffing, customer service, and daily operations, the last thing you want is an unexpected facility crisis that disrupts everything you’ve worked to build.
Take the case of a coffee shop franchisee we worked with. Business was booming—until the air conditioning stopped working in the middle of a scorching summer week. They assumed the landlord handled HVAC issues, but their NNN lease said otherwise.
“We had one client, a coffee shop franchisee, who didn’t realize HVAC upkeep was fully on them until their unit failed mid-summer,” recalls one HVAC technician. “The emergency repair cost $8,000, and they lost three days of peak business while waiting for parts.”
Unfortunately, stories like this are all too common for tenants in triple net (NNN) lease arrangements.
This article draws from real-world experience helping tenants avoid expensive oversights and compliance issues. While this information is educational and based on industry best practices, it’s not intended as legal advice. Always consult with an expert for specific lease questions.
What Is an NNN (Triple Net) Lease?
A Triple Net (NNN) lease is a commercial lease structure where tenants pay for property taxes, insurance, and maintenance costs in addition to their base rent. Think of it as the landlord saying, “You handle the property upkeep, and I’ll provide the building.”
Unlike a gross lease where the landlord covers most property expenses, an NNN lease shifts these responsibilities directly to you as the tenant. This arrangement often results in lower base rent, but it also means you’re responsible for maintaining the property as if you owned it.
What Are Tenants Responsible for Under an NNN Lease?
Under a typical NNN lease, tenants are responsible for three main categories of expenses:
Property Taxes: Your proportionate share of the building’s property taxes, usually calculated based on your square footage compared to the total building space.
Insurance: Property insurance premiums for the building, again typically allocated by square footage. You’ll still need your own business liability and contents insurance.
Common Area Maintenance (CAM): This is where facility management becomes crucial. CAM expenses typically include:
- HVAC system maintenance and repairs
- Plumbing and electrical systems
- Exterior maintenance (parking lots, landscaping, snow removal)
- Interior common areas (lobbies, hallways, restrooms)
- Security systems and lighting
- Janitorial services for shared spaces
- Structural repairs and roof maintenance
Important Note: Lease language varies significantly between properties and landlords. Always review your specific lease terms with a qualified commercial real estate attorney to understand exactly what you’re responsible for.
The key difference between NNN and gross leases becomes clear when you compare responsibilities:
- Gross Lease: Tenant pays rent; landlord handles most property costs
- NNN Lease: Tenant pays rent plus property taxes, insurance, and maintenance costs
Why Facility Management Becomes a Pain Point for Tenants
In our work with retail tenants, we often see major oversights in preventive maintenance. For example, skipping quarterly HVAC checks leads to expensive emergency repairs that could have been prevented with routine service.
“Most business owners enter NNN leases thinking they’re just getting a better rent deal, but they don’t realize they’re essentially becoming property managers overnight,” explains Sarah Chen, Senior Vice President at CBRE. “The hidden costs aren’t just financial—it’s the operational disruption and time investment that catches tenants off guard. I’ve seen successful businesses struggle because they underestimated the complexity of managing building systems while trying to run their core operations.”
The most common facility management challenges we encounter include:
Vendor Coordination Headaches: Managing multiple contractors for different systems becomes overwhelming, especially when you’re trying to run your business. One restaurant owner spent 15 hours one week just coordinating plumbing repairs, HVAC maintenance, and parking lot striping.
Compliance Blind Spots: Many tenants discover too late that they’re responsible for fire safety inspections, elevator maintenance, or ADA compliance updates. These oversights can result in fines, insurance issues, or lease violations.
Emergency Response Gaps: When your HVAC fails on a 95-degree day or your main water line breaks, you need immediate action. Without established vendor relationships and emergency protocols, these situations become costly disasters.
Budget Unpredictability: Without proper maintenance scheduling, facility costs become reactive rather than planned. We’ve seen businesses face unexpected $15,000+ repair bills that could have been managed with $2,000 in preventive maintenance.
Documentation Challenges: NNN leases often require detailed record-keeping for maintenance, repairs, and compliance activities. Poor documentation can lead to disputes with landlords or issues during lease renewals.
When and Why Tenants Hire Facility Managers
According to a CBRE survey, 58% of multi-location businesses outsource some or all facility management functions. This isn’t because they’re failing at property management—it’s because they recognize that professional facility management is a strategic business decision.
Common triggers that lead tenants to hire facility managers include:
Multi-Location Growth: When you expand to multiple locations, coordinating maintenance across properties becomes exponentially more complex. A regional retail chain we work with realized they needed professional FM support when they opened their fourth location and their operations manager was spending 30+ hours per week on facility issues.
Vendor Management Overwhelm: Juggling relationships with HVAC contractors, plumbers, electricians, landscapers, and security companies while running your business becomes unsustainable. Many business owners describe this as feeling like they’re running a second business they never intended to start.
Compliance Complexity: As regulations become more complex, especially around accessibility, environmental standards, and safety requirements, having professional oversight becomes essential. One medical practice avoided a $25,000 ADA compliance fine because their facility manager caught accessibility issues during a routine inspection.
Cost Control Needs: Professional facility managers often reduce overall costs through better vendor relationships, preventive maintenance programs, and bulk purchasing power. They can typically negotiate 15-25% better rates with contractors than individual tenants.
Lease Renewal Preparation: When lease renewal time approaches, having detailed maintenance records and property condition documentation strengthens your negotiating position with landlords.
What to Look for in a Facility Manager or FM Partner
When evaluating facility management options, focus on these key qualifications:
Experience with NNN Lease Structures: Your facility manager should understand the specific responsibilities and compliance requirements of triple net leases. Look for at least 5-7 years of experience with commercial NNN properties.
Local Market Knowledge: Choose someone familiar with your area’s contractors, regulations, and typical maintenance challenges. A facility manager who knows which HVAC contractor can respond within 2 hours versus 2 days can save your business significantly.
Technology and Reporting Capabilities: Modern facility management relies on digital systems for scheduling, tracking, and reporting. Your FM partner should provide regular reports, maintenance schedules, and budget tracking through user-friendly platforms.
Vendor Network and Relationships: Established relationships with quality contractors mean faster response times, better pricing, and priority service during emergencies.
Emergency Response Protocols: Ensure your facility manager has 24/7 emergency response capabilities and clear escalation procedures for different types of issues.
Financial Transparency: Look for facility managers who provide detailed invoicing, help with budget planning, and can explain cost variations. Avoid any arrangement where you don’t have full visibility into expenses.
As facility management consultant Mark Reynolds notes: “The best FM partners become an extension of your business. They understand your operational priorities and make facility decisions that support your business goals, not just maintain your building.”
DIY vs. Professional FM Comparison:
- DIY Approach: Lower direct costs, complete control, requires significant time investment, limited vendor relationships
- Professional FM: Higher upfront costs, leveraged expertise, time savings for core business focus, established vendor networks, better emergency response
NNN Lease Facility Management Cost Breakdown & Timeline
| Facility Management Area | Typical Annual Cost Range | Maintenance Frequency | Emergency Risk Level | DIY Time Investment | Professional FM Benefits |
| HVAC Systems | $2,500 – $8,000 per unit | Quarterly inspections, bi-annual deep service | High (business disruption) | 15-20 hours/year | 24/7 emergency response, preventive scheduling |
| Electrical Systems | $800 – $3,500 | Annual inspection, as-needed repairs | High (safety/code compliance) | 8-12 hours/year | Licensed contractor network, code compliance tracking |
| Plumbing | $1,200 – $4,000 | Semi-annual inspection, emergency repairs | Medium (water damage risk) | 10-15 hours/year | Rapid response, water damage prevention |
| Roof & Structural | $1,500 – $12,000 | Annual inspection, 5-10 year major repairs | High (property damage) | 5-8 hours/year | Professional assessment, warranty management |
| Parking Lot & Exterior | $800 – $5,000 | Seasonal maintenance, 3-5 year resurfacing | Low (aesthetic/safety) | 12-18 hours/year | Seasonal scheduling, contractor coordination |
| Security Systems | $600 – $2,400 | Monthly testing, annual certification | Medium (liability/insurance) | 6-10 hours/year | Monitoring coordination, compliance documentation |
| Fire Safety & Compliance | $500 – $2,000 | Monthly/quarterly inspections | High (legal/insurance) | 8-12 hours/year | Regulatory compliance, documentation management |
| Landscaping & Snow Removal | $1,200 – $6,000 | Weekly/seasonal | Low (aesthetic) | 20-30 hours/year | Seasonal contracts, weather response protocols |
| Janitorial (Common Areas) | $2,400 – $8,000 | Daily/weekly | Low (tenant satisfaction) | 15-25 hours/year | Quality control, supply management |
| Pest Control | $300 – $1,500 | Monthly/quarterly | Medium (health codes) | 4-6 hours/year | Preventive programs, health code compliance |
Total Annual Investment Summary
- Financial Cost Range: $11,900 – $52,400 per year (varies by property size and location)
- DIY Time Investment: 103-156 hours annually (2-3 hours per week)
- Professional FM Fee: Typically 8-15% of total facility costs
- Average Cost Savings with Professional FM: 15-25% through vendor negotiations and preventive maintenance
DIY vs. Professional FM Comparison:
- DIY Approach: Lower direct costs, complete control, requires significant time investment, limited vendor relationships
- Professional FM: Higher upfront costs, leveraged expertise, time savings for core business focus, established vendor networks, better emergency response
Conclusion
Managing facility responsibilities under an NNN lease doesn’t have to become a burden that distracts from your core business. The key is being proactive rather than reactive—understanding your obligations, planning for both routine maintenance and emergencies, and knowing when professional help makes sense.
Smart facility management isn’t just about keeping the lights on and the HVAC running. It’s about protecting your lease compliance, maintaining a professional environment for your customers and employees, and avoiding the kind of unexpected expenses that can derail your business operations.
Ready to Take Control of Your Facility Management?
Thinking of hiring a facility manager?
Left Coast Facilities Consulting offers tailored facility management solutions for tenants navigating NNN lease responsibilities. Their team brings hands-on expertise in compliance, vendor management, and cost control—helping you protect your business while staying focused on growth.
Schedule a free consultation to review your lease obligations and see if outsourcing FM makes sense for your business. Our initial assessment includes a review of your current lease terms, identification of potential compliance gaps, and a customized facility management strategy.
