We also have fixed the annual increases on our NNN charges. In our case this does not agree with Drew's answer. Over several decades we saw that on average NNN charges increased roughly 3% annually. As a result, and to simplify our lease for our tenants, we fixed our increases to be 3% annually. If your NNN charges were $2.50 per square foot per year, they would go up 3% annually, regardless of what we actually spent. The net result has been that Tenants can easily understand what their charges are going to be over the life of their lease, and are not faced with huge increases in a year where for example we had 5 extra days of snow removal. The next year, if we have no snow, it all works out. It is a risk for the landlord, but ultimately makes our less sophisticated tenants happier.
Nov 3, 2016