Austin office space operating expenses

How to cap operating expenses for an Austin office space? The best way to estimate whether a property will have substantial office operating expense increases is to look at the operating costs of the past few years. Office space operating expense increases up to 5% per yr in operating expenses should be budgeted by the tenant as inflation.  You can ask as a tenant what the operating costs have been for the past three years. If the increases have averaged 4% per year , then you can assume they will maintain the same office space operating costs.

Increases in operating expenses

If the increase in office space expenses are high in one year , then sometimes this is a mask for a capital expenditure masked as an operating costs or an indication the costs are not being amortized of the full number of life years of the property. It can also be an indication that the property has not been kept up and that it may be a catch up year. The further a tenant looks into operating expenses for an office space, the more they can judge what the future shall hold.

If you notice the office space is looking run down or the property manger or owner is changing this could effect the operating expenses for the office in the future. Increases in operating expenses for offices can occur from 50-100% for an older building.  Many leases anticipate renovation costs to be charged back to the tenants as part of their operating costs , so your commercial real estate broker can help you with this or your attorney.  As a tenant, you want to look out for this especially if the building is older.  Most landlord will cap their operating expenses to a maximum of 5 %. However, a property tax increase on an office space operating expense is not under their control.