Posted by André on December 25, 1998 at 22:19:05:
There are two types of leases. Gross leases and net leases. Gross would include all servives rendered by a landlord, but normally net of electric, which could be $1,50 per sq. ft. in a moderately warm climate. Tenants normally pay for all their electric. Check with your utility company on the cost of the installation of sub meters, as it is unlikely that tenants would be willing to foot the bill. This is normally a landlord cost. I suggest you find someone who can give you a copy of a comprehensive commercial lease ( a slight bias to landlord would be nice)and study the provisions on operating cost (a.k.a. CAM). There may be books on the subject in your local library, or the local board of realtors may sell a form lease.
Net leases mean the tenants pay for most everything, but as with everything there are always variations.
At any rate, always have your lease language constructed to enable you to recover any increases in real estate taxes, insurance, common area utilities, trash removal etc.
Feel free to e-mail me with any questions. I’m not a know-all, but have managed commercial real estate for 14 years, and hold a BS Real Estate.