Should You Pass on Pass Throughs?

Let compass commercial be your extra set of eyes when reviewing the pass throughs in your lease

I’ve Counseled My Clients to Request a Stop On Their Pass Through Expenses

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 which shows the actual cost billed, less any payments made for these costs.
Pull out your lease to review the description on 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 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 last 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 you have a substantial amount of real estate, it may be cost effective to have someone audit the records. In these instances, the auditors get a percentage of any money found. Tenant representatives are highly skilled at reviewing leases and passing along savings suggestions they uncover.

/ 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.