With the exclusion of base rent and other explicitly financial landlord concessions to the tenant, operating expense structure, definitions, and implementation thereof financially impact the tenant more than virtually any other section of an office lease. If tenants don’t negotiate and exercise their rights to conduct annual preliminary reviews to determine if a full audit is necessary, they are likely throwing money away and/or wasting the cost, time and energy of their team that negotiated optimal operating expense terms.
Posts by Darius Green
Operating Expense Definition – This is where the rubber meets the road. When the landlord is calculating operating expenses, this portion of the lease will dictate what is and isn’t allowed in the calculation, and will be relied upon should a dispute arise. This language should be thorough, concise, and clear.
When there are hundreds of thousands or even millions of dollars at stake in a long-term, generally fixed contract that houses the operations of your multi-million or multi-billion-dollar enterprise, preparing for relocation or renewing a lease is like preparing for your own Super Bowl. To achieve a victory, you must have the right team in place and that team—including you, the decision-maker—needs to be prepared.