What is a reasonal cap to put on a full service lease pass through of additional rent?

I represent a tenant who wants to cap the additional costs on a full service lease. What are some of the industry standards on capping this?
In Leasing Property - Asked by Rhea A. - May 10, 2010
Report Abuse
Answer this Question

Answer(s)

Rob B.
Chandler, AZ

A reasonable cap for NNN is that amount that is found by a careful analysis of the costs of Taxes (N), Insurance (N) and Common Area Maintenance (N). This analysis should be based upon one's knowledge that insurance and other common area vendor relationships have been shopped carefully and managed well. What ever is the amount as a result of this analysis is the cap. It should not be otherwise, as this then would allow one tenant to attempt to dictate its fair share of expenses over fair treatment to all tenants proportionally. (However, a word of caution, sometimes the landlord may take a "hit" by supporting a lower cap. This would then be considered a tenant incentive in order to capture a true anchor-tenant)!
Rob Baird
CA Re License #544165 (one of the oldest active licenses in CA)
951 515-5855

May 13, 2010
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question