Understanding the base year in a commercial lease is essential when evaluating the true cost of occupancy. Although operating expenses may be included in the initial rent, tenants often pay their proportionate share of future increases in expenses such as real estate taxes, insurance, utilities, maintenance, and common-area costs.

Before signing a lease, tenants should carefully review which expenses are recoverable, how increases are calculated, whether any caps apply, and how annual reconciliations are handled. Requesting historical operating-expense information can also help identify potential increases and provide a more accurate picture of future occupancy costs.

At Godino & Company, Inc., we help tenants understand lease terms, anticipate expenses, and make informed commercial real estate decisions.