Keep Your Triple-Net Expenses to a Minimum

By Randolph T. Mason, CCIM, SIOR,
Partner, Commercial Realty Specialists

Triple-net-lease tenants and owners often ask me how they can limit their building’s operating expenses. I have eight tips that I often share with them that can be employed to keep those expenditures to a minimum.

1. Maintain your HVAC system regularly. A brand new HVAC system could last 20 years or more if properly serviced and maintained. The service is generally inexpensive if done each quarter. Maintenance typically includes filter cleaning or replacement, lubricating all moveable parts and checking for leaks or unforeseen damage to the unit.

2. Inspect and maintain your roof. Often, cleaning roof and drain-spout debris is overlooked. This will create a pool on top of the roof during a rainstorm. It does not take long to regularly inspect the roof, and should a minor repair be necessary, take care of it to prolong the life of this asset.

3. Maintain your parking lot. It is not uncommon for a NNN tenant to forgo the reslurring and restriping of the parking lot periodically, but it should be done every three years. When a parking lot is not maintained adequately, cracks and subterranean erosion to begin to occur and then it becomes nearly impossible to simply reslurry. After major erosion occurs, it becomes necessary to repair and resurface the parking lot.

4. Regularly wash and inspect your windows. This will help lengthen the life of window seals. If left to run its course, damage from weather can decay the rubber seals. It’s much more expensive to replace those seals than to simply maintain them, and the rubber is necessary to stop window leaks which — can lead to a greater problem for the building: mold.

5. Maintain the fire sprinklers. It is important to inspect the fire-suppression systems regularly.  An annual checkup and a five-year certification should keep the fire insurance company satisfied.

6. Pay attention to landscaping. A simple way to lower landscaping costs is to plant drought-resistant plants and ground cover. Slow-growing plants will require less maintenance and are often eco-friendly. It is also imperative to check for a leaky backflow, malfunctioning sprinkler systems or standing pools of water, all of which could indicate an underground leak or broken pipe.

7. Maintain the outside metal. It is important to properly maintain outside metal with a good coat of paint to help inhibit the growth of rust. Keep a close eye on metal joints or where exterior metal meets the concrete base.

8. Have your property tax reassessed. If rents in your area have decreased, there is a good chance that the value of your building has decreased as well.  This could warrant a tax bill reduction. It may make sense to talk with the local tax assessor.

With a proper schedule, you can keep your buildings NNN expenses to a minimum and when properly maintained, the useful life of a building and all its components can be extended — all of which help to reduce operating expenses.