Forums: Discussions for entrepreneurs and small business.

I posed this same Topic but I think in wrong category....  Anyway here you go again......

I have 2 small offices that we are renting,  one in downtown Chicago one in Suburbs,  we are planing to move to larger office space not to large but larger then those two we have now.  Company that are managing offices in the building  that we would like to rent in is asking us in addition to 3% annual increase in rent to pay increase in real estate taxes if the increases happened. So lets say on the base of previous increase in taxes that would be around $500 addition for 1000SF. My question here for somebody who is experienced in real estate and office rents,  is that normal in this industry to transfer real estate taxes of the end users, even thought we don`t own that building.  I know everybody want to have clear profits but why we don`t pay real estate taxes in another 2 places we have office in.  Or would be this rule only to this management company I don`t know.  Any help or advice would be greatly appreciated.

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Goran Paunovic
Creative Director

ArtVersion.com
One Northfield Plaza
Suite 300
Northfield, IL 60093

It is common for Tenant`s to pay a portion of taxes, insurance, common area and operating expenses. Usually this is billed as a seperate item in addition to your base rent and is adjusted annually based on actual expenses. Look for a section in the lease titled "Operating Expense Reimbursement".  If you are reimbursing for Operating Expenses then they should not increase your base rent based on tax increases.

 

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Rebecka Melson | Virtual Business Services | www.vbsofok.com

Many thanks that helps.

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Goran Paunovic
Creative Director

ArtVersion.com
One Northfield Plaza
Suite 300
Northfield, IL 60093

Try to negotiate a cap in Operating Expense pass throughs. A reasonable cap would be 3-5%. We have a few articles about this very topic at www.rofo.com if you need more help.