Did you get an increase in operating costs for the building?


Did you get an increase in operating costs for the building?

Did you get an increase in operating costs for the building?  This tax season, you want to evaluate the pass through’s or increases over a base year that your landlord charges you.  More than likely you received a bill already which shows the actual cost billed less any payments made for these costs. Covid caused more increases in operating expenses compared to past years. Hand sanitizer stations are just one small item the landlord may have changed. In larger buildings, landlords had added additional air filtration systems, security checks to get into the building, and kick stops on doors for bathrooms. These costs will be passed onto the tenants in the building.

Pull out your lease to review the description of allowable expenses. Do so now, before the time period for dissent passes.   If your landlord replaced the entire roof – a capital expense – make sure you were only charged a portion of the total bill representing your space. Make sure you aren’t assessed for build-out expenses for other tenants or rent on vacant space in the building.

If you find a new expense on your annual leasing statement that wasn’t there in the previous year, ask for an explanation of charges and bills affixed to this charge. I’ve counseled my clients to request a stop on their pass-through expenses or a ceiling on how much can be charged annually. You’d be surprised what savings can accrue just by fly-specking your bill.

Many times, people just pay these costs without checking. If the landlords sent you a report which doesn’t make sense, call them and have them walk you through it.

/ Commercial Real Estate

About the Author

Lynn Drake’s status is well known in the industry: She’s the commercial realtor focused on maintaining “true north” for her corporate clients. It’s a reputation built on 35 years of commercial real estate experience. Lynn became a commercial realtor in 2001 after 15 years in corporate real estate. Thus far in her career, Lynn has successfully completed over 1,500 real estate transactions ranging from small business tenant leases to the sale and purchase of industrial complexes.