“In whatever areas of life or endeavor, one may meet the challenges of courage. Whatever may be the sacrifices, if one follows his/her conscious; the loss of friends, his/her fortune, his/her commitment, even the esteem of fellow men….Each person must decide for him/herself the course he/she will follow. The studies of past can define that ingredient, they can teach, they can offer hope, they can provide inspiration, but they cannot supply courage itself. For this, each person must look into their soul andtake action thereon.” JFK
paraphrased byfsmfrom a quote by Caroline Kennedy, his daughter, in her book, “Profiles In Courage For Our Times.”
Among the most common questions asked by our clients is, “So what is the total gross rent that we will be paying?” The answer to this question starts by stating that each building can be slightly different and most landlords have different definitions as to what constitutes gross rent for the space they are leasing.
The simplest approach as far as tenants are concerned, gross rent will include all real estate costs associated with renting a space ( except sales tax in Florida):
Building Insurance ( Landlord’s)
Common Area Maintenance (CAM’s)
Gas & Electric Utilities
1. Gross Rent Example Two (Modified Gross “MG”): Base Rent + Additional Rent (Utilities?) = Gross Rent Additional Rent varies from property to property, so always ask what additional rent includes. Gross Rent / 12 months = Monthly Gross Rent
Example One (Triple Net “NNN”): Base Rent + NNN = Gross Rent NNN = Taxes + Building Insurance + CAM’s Gross Rent / 12 months = Monthly Gross Rent
These costs are not always clearly laid out in the marketing material of various property listings and some of the costs vary broadly from property to property (i.e. taxes on office/flex space vs downtown office space). In addition, some of these costs are entirely founded in what the tenant may require and are outside of the landlord’s control. Items like data wiring or tenant specific improvements need to be assessed prior to finalizing any deal and signing a lease. We define these costs by placing them into two categories: gross rent & variable costs.
Will you please send me a breakdown of your NNN’s or additional rent?
Do these expenses include items like management, gas & electric utilities?
If gas & electric utilities are not included, how are they charged? Are they seperately metered or pro-rated?
Can you send me a 12-month average if utilities are not included? (This information can also be achieved by calling the utility provider for the building.)Variable costs are paid by the tenant, either directly, or indirectly as they are assumed in the rent as offered. Some of the costs are defined below:
2. Variable Costs
Tenant Improvements: Some spaces are ready “turn-key”; the tenant signs the lease, grabs the keys and moves right in. Other spaces require a build-out, meaning that to prepare the space to meet the tenants needs, the landlord and tenant must negotiate who will pay for and be responsible for completing a certain amount of finish.
Telephone/Data: Always carefully review your costs as they are associated to your connectivity. Some buildings are wired with access to high speed internet while others do not have a major service provider like Comcast or Century Link. Keep in mind data costs will vary broadly as service providers have different definitions of “high speed.” Make sure you are comparing this real cost to weigh your options when looking at various properties!
Landlord Incentives: I find it is often overlooked that landlords may offer incentives. These discounted costs deviate from one building and it’s landlord to another, but always keep in mind to ask.
As you can see, there is no straightforward answer regarding what gross rent does and does not include. Whether you are a tenant or a landlord, these costs should be clearly defined in your lease agreement. Sourced by the Colorado Group
TMC-The Mahr Company understands that Commercial Real Estate Sectors and Markets are Dynamic not Static. We have learned to slide to market variances. At any snapshot in time, the picture of the market based on facts of the ground, is what it is. Our commitment to you is to know what the market is at any given time and to be proactive to it. TMC-The Mahr Company, YOUR Senior Vice President of Real Estate. Our commitment to you is Excellence……
April 2014 : This is Palindrome Week as every date this week is a palindromic number. A palindromic number is a number that remains the same when its digits are reversed. It is an amusing way to look at numbers. How do your numbers luck in your business ? Are they aligned ? Is there room to improve? Do they need to be adjusted as to your real estate occupancy costs, spatial needs or investment portfolio.
TMC-The Mahr Company– We are committed to providing you the highest level of service, attention to detail and commitment to excel excellence. TMC has the skill sets, market(s) knowledge, experience, resources, energy and determination to take a proactive approach to achieve your goals.” If you are not engaged in the game, the sidelines only offer a spectator’s view.” fsm
If you are not engaged in the game, the sidelines only offer a spectator’s view.
TMC The Mahr Company is available to assist you in positioning your business model in 2014. As we are starting the second quarter of 2014 how are you and your business model positioned to take advantage of the emerging trends in commercial real estate? We have the skill sets, market knowledge, experience, energy and determination to take a proactive approach to achieve your goals. If you are not engaged in the game, the sidelines only offer a spectator’s view.