There are essential documents relating to office building CAM costs and other operating expenses that can show you whether additional rent will end up wreaking havoc on your cash flow when it’s too late — after you’ve signed a lease!
Don't let that happen to you.
Later, if you ask the landlord why they didn’t disclose those costs to you when you negotiated the lease, they may simply respond: “Because you didn’t ask about them.”
So before you proceed with lease negotiations, it's essential to get and review the following five types of key documents from your landlord. The Jeff Tabor Group does this as a matter of routine.
Expense schedules typically break down the expenses by category—such as cleaning costs, energy, and insurance.
A landlord generally prepares an expense schedule annually and then sends it to tenants after the end of each fiscal year. You should request expense schedules covering the past several years.
They will help you determine what—and how much—was charged. Since there are well-established norms for each category of expenses, an expense schedule is a good indicator of whether the building is being managed properly. (High expenses can be a sign of mismanagement, but bear in mind that energy and insurance costs have risen dramatically over the past few years.)
If you are dealing with a new building, review a budget of its projected CAM costs and operating expenses, including real estate taxes.
The historical operating expenses provide a seemingly obvious window into what you might anticipate happening next – and yet it is always surprising how many brokers do not ask to see them.
When requesting historical documents like these, the objective is to review all underlying financial information that…
