Electricity charges for common areas including lobby lighting, elevators, exterior signage, and shared mechanical equipment.
Key Takeaways
| Lease Type | Recoverable? | Controllable? |
|---|---|---|
| NNN | Yes | No |
| Modified Gross | Yes | No |
| Full-Service Gross | No | No |
Approximate budget share: 10-15% of total CAM pool.
Common area electricity covers lighting, elevator power, exterior signage, security systems, lobby HVAC, and other shared mechanical equipment. Under NNN leases, tenants pay their pro-rata share of metered common area electricity consumption. The overcharge risk is concentrated in three areas. First, without sub-metering, the boundary between common area circuits and tenant suite circuits is ambiguous. Landlords may allocate aggregate building electricity using SF ratios, inadvertently or deliberately including tenant-specific consumption in the common area pool. Second, during landlord construction or renovation projects, temporary power from common area panels is routinely used, and the resulting consumption spike is passed through as an ordinary operating expense. Comparing kWh consumption by month against prior years and against construction schedules exposes this pattern quickly. Third, a small number of landlords apply a markup to electricity pass-throughs, a practice that requires a utility resale license in most states and is prohibited by most well-drafted leases. Requesting actual utility bills with kWh detail for each billing period is the most effective way to detect all three overcharge types.
Overcharge Risk
$2,000-$79,000/year
typical annual overcharge when this line item is disputed
Landlords tap common area electrical circuits for construction or their own use during building renovations, then pass those costs through as common area electricity.
| Legitimate Charge | Suspicious Charge |
|---|---|
| Electricity billed at actual utility rate with no markup, sub-metered to common areas | Markup percentage applied to the pass-through above the actual utility invoice rate |
| Stable or declining kWh consumption consistent with occupancy and hours of operation | Electricity spike coinciding with landlord construction that returns to baseline afterward |
| Common area circuits sub-metered and reported separately from tenant suite panels | Aggregate building electricity allocated pro-rata SF without sub-meter separation |
| Electricity charges decreasing proportionally when building occupancy or operating hours decrease | Flat or increasing electricity charges during periods of reduced occupancy with no explanation |
Require sub-meter audits to verify common area electricity consumption. Prohibit markups on utility pass-throughs. Challenge any construction-period electricity charges as the landlord's cost, not a tenant operating expense. Request utility bills showing the actual kWh consumed and the rate paid.
Check Your Electricity (Common Area) Charges
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