"Expenses in Addition to Rent"

One of the first major negotiations of a new enterprise, other than obviously a home based business, is to lease commercial space. The entrepreneur needs professional advice from an attorney knowledgeable in real estate contracts, a licensed commercial real estate broker and if necessary, an architect (to advise on space design and a work letter when applicable).

This applies to stores, lofts, offices, manufacturing facilities,etc.... There are many provisions embodied in the contract prepared by the Landlord (or its attorney) that could entail substantial expense over the term of a lease or can reduce income potential.

The following are examples of that which is in addition to the rent:

  • real estate taxes
  • common area maintenance(CAM)
  • escalation based on the consumer price index(CPI) or another formula to protect landlord against inflation on long term leases
  • utilities(electric, water & sewer, gas)
  • trash disposal
  • air conditioning maintenance
  • costs incurred on subletting or assigning (or prohibition against)
  • end of lease cost on restoration
  • potential moving in or out of the premises
  • landlord's calculation of space measurement
  • tenant improvements (TI) over and above the work letter
  • exclusivity rights, signage, parking, hours of operation, etc...
Commercial Lease Pitfalls