What is a Double Net Lease?

Net lease commercial real estate offers compelling opportunities for both property owners seeking predictable, long-term income and tenants operating mission-critical business locations. In a net lease structure, financial responsibilities for operating expenses are allocated between the tenant and the property owner, creating varying levels of risk and control. These structures generally fall into three primary categories, distinguished by how expenses are distributed between the parties. In order of market prevalence, these include the Triple Net (NNN) Lease, Double Net (NN) Lease, and Single Net Lease.

While many investors are familiar with the more common Triple Net (NNN) lease structure, questions frequently arise around less widely understood net lease variations. One of the most common inquiries is, “What is a double net lease?”

In this article, we focus specifically on the double net lease structure and how it functions in practice. We outline the key advantages and potential drawbacks of double net leases and explain how they differ from single net and triple net lease arrangements.

What is a Double Net Lease?

A double net lease is a contractual agreement between a property owner and a tenant in which the tenant is responsible for paying property taxes and insurance costs, including premiums and deductibles, in addition to base rent. Under this structure, the property owner retains responsibility for building upkeep and ongoing maintenance, ensuring the property remains operational and well-maintained.

Advantages of a Double Net Lease

In a double net lease structure, the property owner is able to pass through a significant portion of the property’s operating expenses by assigning responsibility for taxes and insurance to the tenant. As a result, the property owner is not required to budget for annual property tax obligations or manage insurance policies, as these costs fall within the tenant’s operating responsibilities.

Drawbacks of a Double Net Lease

The primary drawback of a double net lease is that the property owner retains responsibility for building maintenance, requiring a more hands-on landlord role. This includes managing ongoing upkeep, addressing structural or mechanical issues, and covering related costs that may arise over time. As a result, unexpected maintenance expenses can materially impact cash flow and reduce overall investment margins if not properly anticipated.

When evaluating an investment subject to a double net lease, it is critical to review the lease terms in detail to clearly understand which financial obligations remain with the property owner. Assessing the property’s condition, maintenance history, and age can also help investors estimate the likelihood and frequency of future repairs and capital expenditures.

When to Use a Double Net Lease

Double net leases are most commonly used in commercial real estate assets such as retail centers, office buildings, and select medical or professional properties.

This lease structure can be well-suited for investors seeking to reduce exposure to recurring expenses like property taxes and insurance while maintaining control over the physical condition of the asset. It may also appeal to tenants who prefer predictable operating costs without assuming responsibility for major repairs or capital expenditures.

In markets where triple net leases are not feasible or customary, double net leases offer a balanced alternative that aligns landlord and tenant interests without disproportionately shifting risk to either party.

Comparing Net Lease Types: Single, Double, and Triple Net

To determine which net lease structure best aligns with your portfolio strategy and long-term investment objectives, it is essential to understand the distinctions between double net, triple net, and other common lease types. Below is a closer look at how single net and triple net leases are typically structured, providing a clear comparison across the full spectrum of net lease arrangements.

Gross Net Lease

A gross lease is an agreement in which the tenant pays a fixed monthly rent while the landlord assumes responsibility for all property operating expenses. These expenses typically include property taxes, insurance, maintenance, and repairs. Gross leases are most common in multi-tenant properties and appeal to tenants seeking simplicity and cost predictability. Because the landlord bears the full financial responsibility for operating costs, rental rates under a gross lease structure are generally higher.

Single Net Lease

A single net lease requires the tenant to assume responsibility for property taxes in addition to paying an agreed-upon base rent. Single net leases are less common, and in many cases, the property owner collects the tax amount directly and remits payment to ensure accuracy and timeliness. Aside from property taxes, no other operating expenses are passed through to the tenant, leaving the property owner responsible for maintenance, repairs, and all remaining property-related costs.

Triple Net Lease

A triple net commercial lease, commonly referred to as an NNN lease, is an agreement in which the tenant assumes responsibility for nearly all property-related expenses in addition to base rent.

The tenant’s obligations typically include:

• Base rent for the building or leased space
• Property taxes
• Insurance premiums
• All maintenance, upkeep, and repairs

Sands Investment Group brings deep expertise across all net lease structures, guiding investors through the advantages and trade-offs of each strategy with clarity and precision. SIG has completed more than 1,700 transactions across 48 states, representing over $4 billion in total deal volume since 2010.

If you’re interested in exploring NNN properties for sale or discussing current net lease investment opportunities, connect with a SIG advisor today. Our team is available to provide market insight and tailored guidance aligned with your investment goals.