Boxing in the Dark

Boxing in the Dark

One of the things that make it hard to figure out the costs of leasing a building is that different types of real estate charge differently for space.  For instance a retail or industrial building is going to charge a base rent plus taxes, maintenance and utilities.  These chargers can be all over the map so don’t assume one building has the same net charges as the next one.

Gross leases are usually associated with office arrangements.  This means that the tenant doesn’t pay anything beyond the rent per square foot but costs and charges vary by region and state.

In Michigan for instance a gross lease usually means the tenant pays the base rent and pays a percentage increase over the base year plus electric. In New York the gross rate is factored by another formula.

Whenever I prepare a request for lease proposal I ask to get in writing a definition of what the true cost are included in a gross rate.  Otherwise it’s like boxing in the dark because one never knows what is going to hit them next. Come prepared to shed a lot of light into the bargaining arena.

 

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