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What unplanned costs are hiding in your commercial lease?

On Behalf of | Sep 10, 2021 | Commercial Real Estate |

After finding a commercial property that will suit your needs, you now have a lease in your hands. You know enough about commercial leases to realize you should take the time to study it carefully and that you have the right to negotiate some of the terms. You may even have a general understanding of items known as CAM, or common area maintenance. 

However, you should also be aware of other fees and costs that property owners typically hide in the fine print. Many of these may be included in your CAM fees, and you will want to be certain your landlord is not charging you more than your fair share. Depending on your business and the manner in which you intend to use the rental space, you might even be able to eliminate some of these fees altogether. 

What does your lease really say? 

The language in a commercial lease can be quite deceptive, and building owners or managers sometimes couch extra expenses in subtle phrasing. Some wording might even allow a landlord to come back and collect more money from you. For example, if your lease provides a certain allowance for you to renovate or upgrade your rental unit, be sure you get an estimate before you agree to that amount. If your improvements cost more than your allowance, your landlord may bill you for the balance. Other hidden costs can include: 

  • Usable square footage, which, for some unprincipled landlords, might even include elevator shafts and other questionable areas to hike your fees 
  • Capital expenditure fees, in case the landlord decides to make major repairs to the building, such as a new roof or upgraded HVAC 
  • Administrative or management fees, which might be a percentage of your rent or a portion of the actual expenses for managing the property 
  • Uncapped rent escalations, which a landlord might enact if unexpected operating expenses arise 

Any of these and some others could be unnecessary costs you can negotiate to potentially reduce or remove from your lease. In some cases, a lease might list a fee for the same service under several different names. If you do not understand any charges on your lease, you have the right to ask, and if the landlord’s explanation does not clarify your confusion, a real estate law professional may have the answers you are seeking.