Office tower leases use base-year structures where a low base year means higher escalations every year after. Verify the base-year calculation before anything else.
An office tower is a multi-story commercial building, typically 10 or more floors, located in an urban central business district. These Class A or B properties house corporate tenants, law firms, financial services, and technology companies. CAM (operating expense) charges cover building-wide systems including HVAC, elevators, lobby maintenance, and shared amenities.
Typical Lease
Full-Service Gross or Modified Gross with expense stop
Avg CAM/SF
$15.00 to $30.00
Mgmt Fee %
3% to 5%
Office towers typically use a base-year or expense-stop structure rather than NNN. Tenants pay their pro-rata share of operating expenses that exceed the base-year amount or the stop. The base year is usually the first full calendar year of the lease. This structure means the base-year selection and expense calculation methodology are critical to controlling costs.
Landlords may reduce base-year expenses through deferred maintenance, temporary vendor discounts, or accounting adjustments, creating an artificially low baseline that maximizes future escalations.
When a building is not fully occupied, variable expenses should be grossed up to reflect what they would be at full occupancy. Errors in the gross-up formula can overstate expenses and inflate tenant pass-throughs.
Elevator modernization, lobby renovations, and HVAC system replacements are capital projects. Landlords sometimes classify portions of these projects as "repairs" to pass the cost through as operating expenses in the year incurred.
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$22.00/SF
Average Class A office tower operating expenses are estimated at $22.00 per square foot in major metros [industry estimate]
Source: BOMA Experience Exchange Report (2024)
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
