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Operating Expenses for Office Space Free Information On Operating Expenses for Office Space Office space expenses are typically paid by the landlord. This includes items such has common area utilities, common area maintenance, insurance, property taxes and management. Tenants often pay an allowance for expense escalations for operating expenses above a defined level. Operating expenses for escalation do not include items such as tenant improvements, leasing commissions and interest. Depreciation Non-cash expenses such as depreciation and amortization would not be included. While each lease is negotiable, most office leases utilize a gross rent basis with the tenant paying an expense escalation. However, this varies from market to market. Who Pays for Repairs and Replacements for Tenant Space? Repair and replacement of the roof is typically handled by the landlord. However, in some leases the tenant is responsible for this expense. Repair and replacement of the HVAC system can be a negotiated matter. In most offices the landlord pays for HVAC repair and replacement. Brokerage Fee Payment of the brokerage fees should be addressed in the lease. If a tenant rep broker has been working with you to find office space, you probably signed a representation agreement prior to working with the broker. This agreement would likely provide your commitment to work exclusively with the broker for a defined period. (Include a 30 day cancellation clause in case you are not satisfied with the work performed by the broker. In many cases, this agreement would still provide a level of protection to the broker if you lease space he suggested.) Document the Brokerage Fee, Even if You are not Paying Your agreement with the broker should also document who is responsible for paying the brokerage fee. In most cases, this will be the landlord. However, even if you have already documented your agreement with the broker, it is better to affirm the agreement within the lease to avoid a misunderstanding. Next Chapter Leasing Office Space - Expense Escalations
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