WHY OPERATING EXPENSES VARY FROM PROPERTY TO PROPERTY?

Have you ever wondered why operating expenses vary from property to property?  Energy consumption, service levels and service contracts can vary greatly so it is advisable to secure the details prior to lease execution.

Expenses May Vary

Paramount has been involved in several recent office lease transactions.  Many, highlight the need for a close review of the property’s operating budget.  Some “full service” leases may include daily cleaning, vacuuming, replacing light bulbs and cleaning your breakroom.  And then others may not include these services at all or the services may be on a more limited basis.

Avoid Surprises

Most property owners reserve the right to change rules and regulations and janitorial specs.  It’s a good practice for your representative to take the time to request the budget and janitorial specifications.  Once you have the detailed information you will be better able to compare properties.  After settling on your most desirable property, a close review of the associated lease language is advisable.  Although, this may uncover conflicts or missing details that might surprise you during your term.  As an example, say your employees prefer to eat lunch in your office suite.  As a result, this practice most likely makes it imperative that janitorial specifications would include daily trash service.  No one wants to smell that reheated salmon the first time let alone the rest of the week!

Knowing the service level upfront will allow you the opportunity to verify the details are incorporated into the final lease.  After all, operating expenses and real estate taxes can be 50% or more of your overall rent and you should only be paying for services you receive.

Need Real Estate Advice.  Call Paramount.
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(952) 854-8290

Or reach out to one of our Trusted Agents:

Office Agents: Nancy Powell, Vice President | Jeffrey Swanson, Associate

Industrial Agents: Fred Hedberg, CCIM, SIOR, Principal | Phil Simonet, Principal | John Young, CCIM, Vice President | Joseph Schultz, Associate | Jack Buttenhoff, Associate