OPERATING EXPENSES: What’s Included in Your Base Rent?

Typical Rent Structures

Internet/Phone and related cabling are typically a tenant expense and excluded in rent structures, with the exception of most co-working facilities and executive suites.

Operating Expenses & Base Year Explained
Full Service Lease

Base Year:
  • Established in first year of occupancy
  • No additional Operating Expense (OpEx)/additional Rent due
Year Two:
  • Tenant assumes pro-rata share of total building OpEx increase over Base Year
  • Owner protected from excessive annual OpEx increases
  • No additional OpEx rent due in the event of second year OpEx reduction
Example:
Tenant is responsible for cost delta from current year over Base Year.
$1M Total Building OpEx in Base Year
 
$1.1M Total Building OpEx in Current Year
 
$100K Delta from Current Year over Base Year
 
3.55% Your Pro-rata Share of Building OpEx (Premises SF/Building RSF)
 
$3,550 Your Additional Rent in Current Year: $3,550 annually or $296/mo
 
Annual Base Rent Escalation

Your rent will likely escalate each year. How it escalates should be negotiated and then specified in your lease.

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