NNN vs Full Service Lease: The Practical Tenant Guide
If you’re touring office space, retail space, flex space, or industrial/warehouse space for lease in Portland, OR, you’ll see two lease structures over and over:
NNN (Triple Net)
Full Service (often “Full Service Gross”)
They can look similar on a listing sheet, but the cash flow, risk, and true occupancy cost can be very different. This post breaks down what each means, how to compare them apples-to-apples, and what to negotiate so you don’t get surprised later.
What is an NNN lease?
In a NNN lease, you pay:
Base rent (your rent rate)
NNN / Operating expenses (your share of building costs), commonly including:
Property taxes
Building insurance
Common Area Maintenance (CAM) (repairs, landscaping, lighting, snow removal, etc.)
NNN is typically quoted as “Base Rent + NNN” (example: $1.25/SF/mo + $0.35/SF/mo).
What is a Full Service lease?
In a Full Service lease, the landlord usually includes most operating expenses in one rent number. You pay:
One all-in rate (example: $3.25/SF/mo Full Service)
Often there’s still a catch: many “Full Service” deals include expense stops or annual pass-throughs above a base year. So it’s not always truly “all-in forever.”
The real difference: certainty vs control
NNN: more variable, more transparent
Pros for tenants
You can see the components of cost (rent vs expenses).
Can be cheaper on paper, especially in industrial.
Sometimes better aligned with longer-term deals (5–10+ years).
Cons for tenants
Expenses can increase: taxes reassess, insurance spikes, CAM rises.
Budgeting is harder if you don’t diligence the building.
You may pay for items you didn’t expect unless the lease is tight.
Full Service: more predictable, but read the fine print
Pros for tenants
Easier forecasting and monthly budgeting.
Less admin time auditing CAM statements (sometimes).
Great for smaller office users who want simplicity.
Cons for tenants
The “all-in” rate can embed landlord padding.
Expense stops/base-year structures can shift cost back to you anyway.
Some services/utilities/janitorial may still be excluded.
How to compare NNN vs Full Service (the only method that matters)
You want an effective rent calculation: the true all-in cost over the term.
Step 1: Convert everything to “all-in occupancy cost”
NNN example (industrial / warehouse space for lease Portland OR):
Base Rent: $1.25/SF/mo
NNN estimate: $0.35/SF/mo
All-in estimate: $1.60/SF/mo (before utilities and any direct charges)
Full Service example (office space for lease Portland OR):
Full Service Rent: $3.25/SF/mo
Add: any “above-standard” HVAC, after-hours charges, parking, etc.
All-in estimate: $3.25/SF/mo + extras
Step 2: Model annual increases correctly
Base rent escalations (often 3–4% annually, or fixed steps)
NNN/CAM growth (often 3–6% annually, but can be higher in bad years)
Reassessment risk (taxes can jump after sale/major improvements)
Step 3: Include incentives
To compare fairly, include:
Tenant improvement allowance (TI allowance)
Free rent / abatement
Landlord work (delivered improvements)
Moving/relocation costs
Renewal options and termination rights (if any)
The right question isn’t “Which rent is lower?” It’s: “What’s my total occupancy cost and risk over the full term?”
What Portland tenants should watch for (especially in NNN)
1) What exactly is included in CAM?
CAM can include legitimate common-area costs—and sometimes questionable items.
Ask for:
The last 2–3 years of CAM/NNN reconciliations
Budget for the current year
A clear list of inclusions/exclusions in the lease
Negotiate out items like:
Capital improvements (or at least require amortization + cap)
Landlord’s legal fees, leasing commissions, marketing
Management fees above a reasonable percentage
Reserves that are vague or unlimited
2) Capital expenses: excluded, amortized, or passed through?
Big-ticket items (roof, parking lot, HVAC replacements) should not be casually dumped into CAM.
Common compromise:
Allow amortized capital items that reduce operating costs (like LED upgrades), over a defined useful life, with a cap.
3) Management fee caps
It’s common to see a property management fee inside CAM. Put a cap or define it tightly.
4) Audit rights
You want the right to review/audit NNN charges and dispute errors within a realistic timeframe.
What to watch for in Full Service leases
1) Base year / expense stop language
Many “Full Service” leases are:
Base year: first year’s operating costs are included
Tenant pays increases above that base year (often proportional to SF)
This can behave a lot like NNN over time.
2) “Standard” HVAC hours and after-hours fees
Especially in office:
After-hours HVAC can add real cost.
Define hours, rates, and controls.
3) Utilities and janitorial
Even “Full Service” may exclude:
Electric inside premises
Gas
Janitorial inside premises
Trash beyond typical levels (retail/food uses)
Which lease structure is better?
NNN tends to be a fit when:
You’re leasing industrial / warehouse / flex space
You want transparency and can underwrite the building
You’re signing a longer term and negotiating tight expense language
Full Service tends to be a fit when:
You’re leasing office space and want predictable monthly costs
Your space needs are stable and you value simplicity
The landlord’s service package and building quality justify the premium
In Portland, it’s common to see:
Industrial: heavily NNN
Office: often Full Service (with base-year structures)
Retail: commonly NNN (with strict CAM definitions being critical)
Negotiation checklist (tenant-focused)
If you remember nothing else, negotiate these:
For NNN
Detailed CAM definition + exclusions
Cap on controllable CAM increases (common target: 3–5%/yr, exclusions for taxes/insurance)
Capital expense treatment (excluded or amortized + capped)
Admin/management fee cap
Audit rights + documentation requirements
Proportionate share defined correctly (usable vs rentable, and any gross-ups)
For Full Service
Base year/expense stop clarified
Clear list of what’s included (utilities, janitorial, HVAC hours, parking)
After-hours HVAC rates capped or reduced
Operating expense passthrough rules and gross-up provisions
FAQs:
Is NNN always cheaper than Full Service?
Not necessarily. NNN can look cheaper upfront, but after expense growth, tax changes, and insurance increases, the all-in cost can surpass a higher Full Service rate—especially if the NNN building has deferred maintenance.
What does “NNN estimate” mean on a listing?
It’s typically a budgeted projection. Actual expenses are reconciled annually. You want historical statements and lease language to confirm what can change.
Can I cap NNN increases?
You can often cap controllable CAM increases. Taxes and insurance are commonly excluded from caps because they’re not controllable.
What’s the best way to compare two lease options?
Build an effective rent calculation over the full term, including escalations, NNN growth, free rent, TI, and one-time costs. Compare total occupancy cost and risk.
Bottom line
NNN vs Full Service is a cash-flow and risk decision, not just a rent number. The “better” lease is the one that matches your business predictability, your tolerance for variable expenses, and the leverage you have in negotiation.