2) Should “Build-Outs” be in my contract? Who pays for the build-out?
Build-Outs are required when the leased space needs to be upgraded or remodeled for the tenant’s commercial needs. Due to the major expense of any construction on a space, this is something that should be a part of the lease. The landlord can negotiate either a turn-key build-out or a flat dollar allowance in order to pay for the modifications.
Turn-Key Build-Out: Here the landlord will cover the entire amount of the build-out. When the landlord does agree to this, rent will often be adjusted (raised) for the possibility of steep construction costs
Flat Dollar Allowance: The tenant can liken this to a construction budget. A flat amount of money will be allotted to the tenant by the landlord. Any incurred costs that exceed the allowance will be the responsibility of the tenant.
3) How is my rental rate determined? The cost of a space is determined by several extraneous factors. Whether the market is down or up, square footage is the only really reliable way to gauge your rental fees. Office and retail spaces are calculated on a per square foot/per year basis. Industrial rents are usually per square foot/per month.
4) What are CAM charges?
A Common Area Maintenance charge refers to any incurred cost for work done on areas accessible to all tenants. The specific percentage of the cost that the tenant incurs is negotiated into the lease. Generally, this should be prorated based upon the percentage of rentable square footage that the tenant has leased out.
For Example: Parking lot maintenance, snow removal, landscaping, and similar services can potentially be paid in part by the tenant as a CAM charge, depending on negotiations with the landlord.
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