Double-Dipping

Double-dipping – office Landlords generally have an annual rental increase, which in our region is a 3% per year rent bump, and there is also an operating expense pass-through increase, which usually takes the base year or first year of the lease as a benchmark and then the tenant pays their prorata share of any increase in following years. This covers increases in PG&E, janitorial, property tax, insurance, water, sewer, garbage, and management. Using a $4/rsf Class A monthly rent as an example, $1/rsf of this might be for the operating expense portion. Therefore, the 3% increase is also on this $1/rsf which is already covered by the operating expense pass-through, thereby giving the Landlord a double-dip in rent increase / reimbursement.