The total annual costs of operating and maintaining a commercial property, including CAM, real estate taxes, insurance, and management fees. In NNN leases, operating expenses are largely passed through to tenants; in gross leases, landlords absorb most costs above the base year.
Operating expenses are defined in the lease - there is no universal accounting standard for commercial real estate OpEx. Leases typically define OpEx broadly and then carve out specific exclusions (capital expenditures, debt service, leasing commissions, etc.).
A landlord's operating expense pool included loan interest payments ($120,000), leasing commissions for new tenants ($85,000), and the CEO's salary ($180,000) - all explicitly excluded from OpEx in the tenant's lease. These additions inflated the pool by $385,000.
The exclusions list in your lease is as important as the inclusions. Review every line of the landlord's operating expense statement against both the definition and the exclusions - not just one or the other. Before your audit, extract your operating expense exclusion list from the lease with lextract.io.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
