who gets $50 per square foot in the budget when it will end up being $65 can make some moves to get the rest of it covered. Given that they may need to get a cheaper buildout done, there are also negotiations to be had between parties to help out the tenant here. Get this finalized before you sign the lease. And by that, I mean get early bids and estimates so you know for sure that your costs will come in under the allotted budget. If they don’t, negotiate the budget for other aspects of the lease or get a cheaper bid.
BASE YEAR COST
By now you know that you are responsible for the expenses of the building. The portion that you are responsible for will be determined upon your “base year,” the first calendar year of your lease term. Because this sets the benchmark for your future costs on operating expenses, it needs to be an accurate figure. You also want to push your base year as far off as possible. If you move in September, you want it to start next January. This way, your pricing isn’t based on the previous year’s repairs and expenses that happened before you moved in. Most tenants will be more than happy to give you a historical estimate of operating expenses to let your baseline pay for the first part of your lease. I suggest making sure that you aren’t accountable for past operating expenses, something that is more than fair. This is a minor detail but in some cases, the tenant can get duped into paying extra based on the previous tenant’s repair costs.
EXPANSION CLAUSE
I’ve explained the benefit of this a few times throughout this
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