Single Net Lease in Renting Properties

A single net lease is a commercial lease agreement in which the tenant pays base rent plus one additional operating expense, which is property taxes. The landlord covers all other expenses: insurance premiums and building maintenance. It is the simplest of the three major net lease types, sitting below the double net lease, where tenants also pay insurance, and the triple net lease, where tenants pay all three operating expenses. The single net lease is sometimes called an N lease or just a net lease.

Think of the single net lease like renting a car where you pay the rental fee plus fuel, but the company still handles insurance and maintenance.

How Single Net Leases Work in Practice

In a single net lease, the rent payment structure breaks into two components. The base rent goes to the landlord as compensation for use of the space. The property tax portion is either paid directly by the tenant to the taxing authority or passed through to the landlord as a separate line item on the monthly payment. Everything else, including roof repairs, HVAC maintenance, plumbing, and liability insurance, stays with the landlord.

This structure makes the landlord more financially involved in the property than in a double or triple net arrangement. The landlord must budget for maintenance, insurance renewals, and structural repairs throughout the lease term.

Where Single Net Leases Appear

Single net leases are less common than double and triple net leases in modern commercial real estate. Triple net leases dominate retail commercial properties because they shift nearly all variable costs to the tenant, giving investors predictable net income. Single net leases appear in older lease agreements, smaller retail buildings, and situations where tenants lack the negotiating leverage or operational infrastructure to absorb more expenses.

When they do occur, single net leases are most frequently found in freestanding retail properties, strip malls, and situations where smaller regional landlords prefer to retain control of maintenance and insurance rather than trust a tenant to keep the property insured and maintained.

Single Net vs. Double Net vs. Triple Net

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Why Tenants Accept Single Net Leases

A single net lease typically comes with a lower base rent than a gross lease, where the tenant pays a flat all-in amount and the landlord handles all operating expenses. Tenants trading away some expense management in exchange for a lower base rent may find single net structures attractive, particularly when property taxes in the area are stable and predictable.

Sources:

• https://propertymetrics.com/blog/types-of-net-leases/
• https://fnrpusa.com/blog/single-net-lease/
• https://www.law.cornell.edu/wex/net_lease