How, then, does a tenant control the amount of the operating expenses passed through by its landlord?
For office building tenants in the South Florida market, we have seen the portion of the common operating expenses that are passed-through to tenants in Class A office space double or nearly triple at some properties over the last few years. In one Miami office building, common operating expenses have increased by over $11 per square foot since 2006 due to unprecedented increases in insurance, electrical charges and property taxes. However, it isn’t unusual to find that these increases include expenses that are not true operating expenses (such as capital expenditures or government required improvements) or are not properly allocated to either the project or to the tenant’s premises. Therefore, besides the need to carefully address and limit the scope of these expenses while negotiating the lease, it is imperative that the tenant scrutinize each expense invoice and compare it to the expense categories delineated in its lease. The tenant should ask for and review detailed schedules of t
