Posted by Penny on November 14, 2008 at 18:19:51:
In Reply to: How to raise rents for office tenants posted by Patrick on November 05, 2008 at 05:04:20:
Are your leases gross or net? If they are gross, consider splitting it into net rent plus CAM (common area management). CAM then includes your operating cost increases, such as taxes, insurance, common utilities, repairs, etc. to keep the place nice.
You then have flexibility on when/how much you raise rent (maybe give a break here during economic times like these) while still recouping the expense increases that you will have. This is basically a quasi NNN type of lease that is often found in multi-tenant props, such as strip malls, etc. The landlord is responsible for the maintenance coordination but the work is paid for out of CAM funds rather than tenants each maintaining a part of the building. At the end of the year, the landlord does a CAM reconciliation. Sometimes there is a credit toward the next year's CAM, sometimes there is a balance due.
Just a thought.