Lease Audit Information
TOPIC OF THE WEEK:
If your lease states that Landlord may include an amount "equal
to" or "not to exceed", a certain percentage
(usually 10% or 15%) of the total common area costs for administrative
expenses, this amount should cover all
administrative costs, whether Landlord chooses to incur them
on-site or off-site.
Normal administrative costs include: computer expenses, telephone
expenses, travel expenses, postage, office equipment, office
supplies, office payroll, consulting fees, accounting expenses,
overhead expenses, etc.
The fee is negotiated by the parties to the lease as a reasonable
amount for all administrative expenses. In most cases, the
fee is greater than the actual administrative expenses incurred.
If Tenants allow on-site administrative expenses and the administrative
fee, what is to keep the Landlord from then transferring all
administrative responsibilities to the center in order to
profit from the fee charged?
Here to read some interesting excerpts from an article
on administrative fees from "Shopping Center Management
Insider". This newsletter is directed at Landlords, however
we think based on this article, that Tenants may benefit more
from a subscription. This article not only supports our position,
but also illustrates several other CAM and non-CAM expenses
that are covered by the administrative fee. (Note - the Board
of Advisors to this newsletter includes an attorney from General
Growth Management and a manager from Taubman.)
If you have any
questions, concerns or ideas for this site, please do not
hesitate to contact us!