Leasing - Extra Costs

Many leases have extra fees above their base rent that can make calculating monthly costs a bit more complicated than the simple multiplication of rental rate and square footage. Listed below are a few of the more common fees that can be seen in leases. Remember in leasing that everything is negotiable and that your tenant representative can help you analyze and negotiate for your needs and budget.

Rental Tax

Rental Tax is imposed by the governing body of an area on all commercial rental space. This is commonly charged as part of the monthly rent payment and then paid to the correct tax authority by the landlord.

Money Due at Lease Execution

The exact amount varies but there is often a security deposit and some rent required to be paid up front at the time the lease is signed.

Operating Expense Increases

In a Modified Gross and Full Service leases your "base year" will usually be defined as the year you move into the space or sign the lease. Since the costs of your proportional share of operating expenses for the building are worked into the base rent, if they increase from what they were in your base year you may be responsible for your percentage of that change in addition to your rent. (These increases typically only apply for leases longer than 1 year)

In a NNN Lease the proportional share of operating expenses are what make up the NNN Fees, so if operating expenses increase your NNN Fees are likely to increase as well.

Annual Rent Increases

To help offset inflation it is common for the rental rate to be increased by a small percentage on a yearly basis. (These increases typically only apply for leases longer than 1 year)

Insurance

The landlord will likely have insurance on the property as a whole, and will often have a liability policy on the property as well. Tenants are commonly required to maintain a liability policy at or above a certain amount of coverage for their space for the life of their lease. Tenants are also responsible for insuring any of their personal property within their space.

Telephone and Internet

Telephone and Internet are typically not considered utilities under any of the three most common lease types and are almost always the responsibility of the tenant.

Signage

Some signage may come included with your space but often any major signage is paid for by the tenant.


Disclaimer: This information is for general reference only, and is based on the laws for the state of Arizona. For specifics or further analysis in calculating your monthly rent contact your tenant representative.