Restaurant Lease Costs: Am I Getting Screwed on NNN?
You are not the only one asking. This question runs through r/restaurantowners regularly, and the honest answer is: some operators are getting overcharged and do not know it. Others are paying legitimately high NNN costs because of where and how they lease space. The difference matters, and it comes down to what your lease says and what the landlord is actually billing.
Here's how to figure out which category you are in.
What NNN costs typically include for restaurant spaces
A triple-net lease makes you responsible for three categories of costs beyond base rent:
Property taxes. Your pro-rata share of the property taxes on the parcel. In high-tax markets like California, Illinois, and New York, this alone can run $8 to $20 per square foot annually for commercial retail space.
Building insurance. Your share of the landlord's property and liability insurance premiums. Expect $1 to $3 per square foot, though specialty coverage or older buildings can run higher.
Common Area Maintenance (CAM). Operating costs for the shared areas: parking lots, landscaping, exterior lighting, HVAC for common spaces, property management fees, trash removal. CAM is the most variable component and where most overcharges occur.
Combined, NNN costs for restaurant spaces in inline retail or strip centers typically run $6 to $18 per square foot annually depending on market, property type, and lease vintage. If you are paying well above that range, it is worth examining why.
Common restaurant-specific overcharges
Restaurants have some particular exposure to CAM overcharges that other retail tenants do not always face.
Exterior lighting charged at disproportionate rates. Restaurants often operate later hours than neighboring tenants. Some landlords attempt to bill restaurants for a higher share of exterior lighting costs based on operating hours. Most NNN leases do not allow this unless the lease explicitly includes an hours-of-operation adjustment to pro-rata share. If your lease uses a standard square footage pro-rata formula, hours-based adjustments are likely not permitted.
Parking maintenance at inflated rates. Restaurant tenants with high-traffic drive-through or parking-intensive formats are sometimes charged more for parking lot maintenance on the theory that their customers cause more wear. Unless your lease specifically provides for this kind of usage-based allocation, your share should be calculated the same way as every other tenant's: your square footage divided by total leasable square footage.
HVAC and kitchen exhaust costs passed through improperly. If your restaurant has specialized ventilation, exhaust systems, or grease trap infrastructure, costs associated with those systems should be your direct expense, not a shared CAM item. Shared HVAC for the building's common areas is legitimate CAM. Your specific restaurant infrastructure is not.
Landlord overhead billed as management fees. Some landlords charge management fees that are effectively landlord profit rather than actual third-party management costs. Your lease should cap the management fee as a percentage of gross operating expenses, typically 3% to 5%. If the management fee is higher or uncapped, that is worth scrutinizing.
Verifying your pro-rata share
Your pro-rata share is the percentage of total property costs allocated to your space. Most leases define it as your leased square footage divided by the total leasable square footage of the property (or shopping center, if applicable).
This calculation can be wrong in a few ways:
The denominator excludes certain tenants. If anchor tenants or certain categories of tenants are excluded from the CAM pool, the denominator shrinks and every remaining tenant's share grows. Some leases allow this; many do not. Check whether the occupancy schedule the landlord used reflects all tenants or just some.
Your numerator is wrong. If the square footage credited to your space in the calculation differs from your actual leased square footage, your share is wrong. Measure your space against the lease exhibit.
The denominator uses occupied square footage instead of leasable. If the building has vacancy, using occupied square footage as the denominator inflates all tenants' shares. Most leases specify "leasable" or "rentable" square footage, which protects tenants from vacancy-driven increases.
What to request from your landlord
To verify your NNN costs properly, request:
- The full CAM expense ledger for the reconciliation year
- The occupancy schedule showing how your pro-rata share was calculated, including the denominator
- Management fee calculation detail
- Any documentation for line items over $5,000 that you do not recognize
Send this request in writing and reference your audit rights clause. Keep a copy. Your audit window is typically 60 to 180 days from the reconciliation delivery date.
Running a CAM scan
If you are not sure whether what you are paying is legitimate or not, a free CAM scan at CAMAudit is a reasonable first step. Upload your lease and reconciliation statement, and the tool checks your charges against your actual lease terms across 14 detection categories specific to commercial leases.
I built CAMAudit because the analysis was genuinely difficult to do without either deep lease expertise or accounting knowledge. Restaurant operators running tight margins should not be overpaying on NNN charges that could be disputed with the right documentation.
Read next: Restaurant CAM Overcharges | Pro-Rata Share Errors in CAM Reconciliations | CAM Audit Rights: What Your Lease Allows