Common Operating Costs as a Commercial Tenant

Whether you are preparing to perform a routine audit of your commercial lease portfolio, or considering a list of potential office spaces for rent, rent is not the only operating cost to review. Aside from rent, there are many other types of operating costs for a rented commercial space. Continue reading to learn some of the most common operating costs you can expect as a commercial tenant, as well as, where to get trusted advice regarding tenant improvements.

Indianapolis Tenant Improvement (TI) Contractors
Tenant Improvements and Office Renovations in Indianapolis 317-253-0531

The Cost of Rent

You can certainly expect to pay rent for your commercial space, but also expect this expense to be the bulk of your total operating costs. Review your base rent cost, then follow up by reviewing how that cost might evolve or increase overtime. Be prepared to learn that your lease allows the commercial landlord to increase rent at their discretion, as many commercial leases do. However, in such cases, the rate at which the rent will increase, and by how much, is usually defined in the lease agreement from the start. There are likely set caps on how high the rent can get. Variable indicators, like the Consumer Price Index, might also influence a landlord’s method of rent changes.

Property Taxes

Taxes are an obvious cost for a commercial tenant, and for anyone working in the country for that matter. In your commercial agreement, the portion of property taxes paid might be with a single, double, or triple net lease. Furthermore, property tax reassessments can result in sudden and unexpected operating cost increases. Talk to your landlord when reviewing your lease, and ask whether or not the property has been assessed recently, or if any assessment is in the books.

Insurance Coverage

General liability insurance might also be an obvious operating expense for a commercial tenant, but there is more to consider when reviewing your lease. For instance, if you have a double or triple net lease, you must pay for a portion of the landlord’s property insurance. When renegotiating your liability insurance premiums, be sure you understand that your space’s location will have an impact.

Utility Costs

Like any other modern building or space, it will require the use of electricity, running water, heating and air conditioning, and many other modern utilities. So, you can expect to pay utility costs on a routine basis, unless you have a gross or full-service lease. Talk to your trusted Indianapolis commercial general contracting company to learn how you can keep utility costs down by incorporating more sustainable infrastructure, operations, and technology.

Miscellaneous Fees

Your landlord might require their commercial tenants to be responsible for paying certain miscellaneous property fees, separate from rent and utilities. Some examples of such fees include parking fees, permits, property facility maintenance, exterior sign displays, a possibly even a hidden repayment of rent abatement. Also, some landlords will offer first months’ rent free, but then require that month’s rent to be repaid by the end of the year. Watch out for this too when reviewing your lease agreement.

General Maintenance and Upkeep

Commercial tenants are generally responsible for maintaining the property on their own dime. This commonly includes expenses like facility maintenance, custodial services, indoor plant care, garbage and recycling, minor repairs, landscaping service, snow removal, and security. Be sure to look for these fees in your commercial lease, and discuss who is responsible for paying what when the time comes. Also be sure to discuss your TI allowance with your landlord, and perhaps plan a needed tenant improvements or remodels for your commercial space or building.

Office Renovations and TI Improvements in Indianapolis, Indiana

Contact BAF Corporation at 317-253-0531 for trusted office and commercial-use construction services in Indianapolis, Indiana and its surrounding locations. Our skilled and experienced commercial general contractors are certified specialists in tenant improvements, office remodels, and commercial-use construction services. Whether you are launching, expanding, renovating, or relocating an office or professional space, our commercial construction and building contractors have the qualified expertise, first-class resources, and latest technologies to support your business’s objectives and generate long-term value. We serve all corporate, commercial, and industrial.

Indianapolis Commercial General Contracting and Design Build Services
Contact Us Today 317-253-0531