In the Spotlight: Negotiation of Operating Expenses in an Office Lease

Naturally, a landlord will attempt to include as many items as possible in its list of building operating expenses of which tenant must pay a proportionate share, and a tenant will attempt to exclude as many of those items as it can. Negotiation of what is included and excluded in operating expenses can have a drastic effect on a tenant's (and landlord's) bottom line. What first seems like an acceptable figure for base rent may no longer look like a bargain after a landlord's laundry list of operating expenses is added to the mix. The intent of this discussion is to provide a brief overview of commonly negotiated operating expenses. This article presents both the landlord and tenant perspective for each operating expense issue discussed.