Bare-house
Bare-house is a form of commercial lease where the tenant takes over most of the obligations the landlord would otherwise hold: operation, maintenance, replacements, insurance and property tax. The term comes from the shipping industry's "bareboat charter", where the owner hires out the ship "bare" and the charterer provides crew, operation and insurance. On land, the word is used about building lease agreements that sit close to the American triple-net (NNN), where the tenant carries all three cost categories on top of the rent itself.
In practice, bare-house means the landlord is left almost solely with the cash flow risk tied to the tenant's ability to pay, not to the operation of the building itself. In return, the tenant gains control over operating decisions, often the right to make adaptations without the landlord's consent within a set framework, and carries both the upside and the downside on energy and operating costs. For the landlord, this translates into a higher NOI measured against gross rent (since operating costs are minimal on the landlord's side) and a more predictable cash flow, which typically gives a lower capitalisation rate and a higher market value.
Bare-house is particularly common in logistics property, industry, data centres and hotels, where the buildings are built for one specific tenant (build-to-suit) on long contracts of 10 to 20 years. The single tenant structure means the building becomes a cash flow machine defined by one tenant's credit, and the valuation becomes almost a bond analysis: how many years to contract expiry, what interest rate expectation the market prices in, and how strong the tenant's credit profile is. Similar pricing models are applied to public buildings let on 25 to 30 years to the state or a kommune.
It is important to distinguish bare-house from "single net" and "double net". In single net, the tenant covers property tax, but not insurance or maintenance; in double net, the tenant also covers insurance; in bare-house / triple-net, the tenant additionally covers all running maintenance and typically also major replacements (CAPEX). What counts as "maintenance" must always be specified in the agreement: some bare-house agreements exclude roof, façade, load-bearing structure and foundations ("structural items"), which remain the landlord's responsibility, while "absolute net" moves these to the tenant as well. The definitions are contract-driven; Norwegian law has no standard definition, and the Tenancy Act lets the parties freely depart from the landlord's maintenance duty in a commercial lease under chapter 5 of the Tenancy Act.
The landlord's risk is concentrated around the tenant's credit and putting the building back on the market at contract expiry. A building tailored to one tenant (special ceiling heights, process layout, weight and capacity) can be hard to let to anyone else. The exit strategy is therefore part of the pricing: a "second generation" building that can be adapted to other users is priced at a lower yield than a highly specific build-to-suit that assumes the single tenant extends.
The agreement form suits cases where the tenant is large, professional and wants operational control, but it is rarely suited to office buildings with several tenants, because the shared areas then have to be managed in a coordinated way by the landlord or manager.
In Placepoint, you can examine a property in the property panel, see tenants and contract terms where the data exists, and add municipal property tax, so that you get a factual basis for assessing a bare-house structure.
How it looks in Placepoint
In Placepoint, you find this in Property panel:
From Placepoint's dictionary: Bare-house
More information: Lovdata: chapter 5 of the Tenancy Act, Eiendom Norge: market reports, Newsec: Property Asset Management
English: Bare-house lease (triple-net-style commercial lease where the tenant carries operating and maintenance costs).
Frequently asked questions
What is a bare-house agreement?
A commercial lease agreement where the tenant takes over most of the obligations the landlord would otherwise hold: operation, maintenance, replacements, insurance and property tax. It corresponds to the American triple-net.
What is the difference between single net, double net and bare-house?
Single net: the tenant covers property tax. Double net: also insurance. Bare-house / triple-net: also running maintenance and typically major replacements. "Absolute net" also includes roof, façade and load-bearing structure.
Where is bare-house used most often?
In logistics property, industry, data centres, hotels and public buildings let on long contracts (10 to 30 years) to one specific tenant. The single tenant structure means the building's value reflects almost solely the tenant's credit.
Which risk is greatest for the landlord?
The tenant's credit and how easily the building can be let again at contract expiry. Highly specific build-to-suit buildings are harder to reposition than "second generation" buildings that can take several use types.