Question about Triple Net Expenses
I'm going to lay out my line of thinking, please tell me where I'm wrong

1. A tenant could reasonably expect to pay $1.50 - $4.00 /sf in NNN annually

2. These cover Taxes, Insurance, CAM

3. A 10,000 SF building, assessed at $1,000,000 could reasonably expect to pay 5% in property tax between the city, county, and state.  Yes rates differ across the country but this could probably be considered about average.

4. This would mean that the Tax portion of the NNN alone would be $50,000, or $5/sf annually.  And we haven't even gotten to Insurance or CAMs yet.


What am I missing?
[{"id": "fmxupki", "text": "#1 is wrong. Some areas may proforma $1.5-4.00 NNN but if this area has $5 taxes then $4 NNN is not reasonable.", "replies": [{"id": "fmxvgeu", "text": "I've worked on industrial/office leases in ~10 states and I've never seen NNN over $4 /sf", "replies": [{"id": "fmxvqci", "text": "Are you comparing monthly vs. yearly NNN\u2019s?", "replies": [{"id": "fmy1lm3", "text": "No, this is all in annual terms\n\nMonthly NNN would never be $5 a foot, that would be $60 a year which is beyond unheard of.", "replies": [], "depth": 4}], "depth": 3}, {"id": "fmzyuaz", "text": "This statement seems ridiculous to me. I\u2019ve rarely ever seen NNNs under $4/SF.", "replies": [{"id": "fn00n43", "text": "In industrial?  I see it all the time.  NNN $2.50 is probably average.  \n\nTo clarify I'm saying Base Rent = $7 NNN with $2.50 est OpEx.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmxz09z", "text": "5% for property taxes would be high around here.  I'm in MD and the property taxes are usually between 1-2% depending on the jurisdiction(s) (you can be in both a city and county, except Baltimore City which acts like its own county.)\n\nOr industrial CAMs are from $1.50-$2.50, maybe in the $3s if you're in a high tax jurisdiction in a pretty tilt-up park.", "replies": [], "depth": 1}, {"id": "fmxzhw3", "text": "What about utilities?", "replies": [{"id": "fmy1pzo", "text": "Tenant will pay those directly to the utility company 99% of the time, and the other 1% they are paying another tenant (who pays the utility company) for the pro-rata share", "replies": [], "depth": 2}, {"id": "fnnawon", "text": "If you mean power for the parking lot lights and water for the landscaping, that is included in CAM (common area maintenance).", "replies": [], "depth": 2}], "depth": 1}, {"id": "fn0e12s", "text": "The 5% property tax assumption seems too high. Even states with the highest property tax percentages (like NJ at 2.35% or IL at 2.3%) are still well below 5%. I\u2019ve never heard of property taxes being separate for local, county, and state.", "replies": [], "depth": 1}]