The pandemic has created a misaligned set of expectations around operating costs.
SERVICE LINE ONE-PAGER
Commercial real estate is gradually returning to normalcy after the disruption caused by the pandemic over the past three years. Despite the increasing economic challenges, such as rising interest rates, businesses are now working to improve their real estate footprint. Performing a lease expense review can not only help achieve cash recovery but also cost avoidance for you while eliminating potential risks from your lease terms.
Across Canada, many companies have implemented a hybrid work strategy, and as a result, many buildings continue to be underutilized. With fewer Tenants using their space, Landlords ought to be experiencing decreases in Operating Costs for items such as repairs and maintenance, utility consumption, and security. Tenants are expecting costs to decrease, yet many are finding the opposite to be the case.
We partner with occupiers exclusively to uncover their portfolio's hidden costs to optimize value. Lease Expense Review is an invaluable tool to identify billing errors that often occur in commercial real estate leases.
Download this Lease Expense Review Method one-pager to explore the value of conducting a Lease Expense Review, and when is a good time to do so.
Experience - Past Clients
Our utility practice team has led several significant real estate projects for Alectra Utilities and its predecessor utility PowerStream Inc. These include accommodation strategies, real estate portfolio reviews, disposition of surplus sites, transaction management, sale/leaseback projects, project management, design, and move oversight.
While mistakes made by landlords are not intentional, they are inevitable. Working with – and not in opposition to – your landlord, our advisors initiate an inquiry on basic lease compliance and fairness.
As your workspace continues to be underutilized, isn’t it time to get a second opinion on your commercial lease, to ensure every penny is accounted for? Talk to your Cresa Advisor today to review your 2023 estimates.
Your 2023 operating cost estimates have likely increased.
According to most leases, Landlords have the right to make adjustments in their calculation methodology which can increase or decrease operating costs, if they determine it is reasonable to do so. As a Tenant, it is crucial to look at the language in your lease to understand the rights required to challenge the Landlord’s determination of Additional Rent. In many leases, Tenants only have a limited amount of time to ask for support documents/information from the Landlord.
Understanding your rights, based on your specific lease, is important, particularly if you are being charged more than your appropriate share as per your lease. So, reading the fine print and being timely in terms of requesting and reviewing the Landlord’s support materials is more important now than ever.
Core Service Offering
Lease Expense Review
There are several levels of review that can be conducted individually or together. Often the size of the location and the potential for recovery determines the type of audit required.
A Desktop Review is applicable to all leases and involves an accounts payable review of the expense billing against traditional account processing standards. Cresa’s Lease Expense Analysts review backup documentation for adequacy and conduct a quantitative verification of the calculation to ensure it’s consistent with the negotiated terms. This kind of review is typically performed on operating expenses but may also be advisable for a 12-month history if there is uncertainty over past payment practices.
A Desktop Analysis is a qualitative review that involves the investigation of suspicious charges. Our analysts provide an opinion of the correct recalculation and suggest the next steps for correcting errors or negotiating reductions in billing. This type of review can be conducted without being on-site.
Lease Expense Reviews are not only about recovering past refunds. A thorough Lease Expense Review can create future savings by ensuring the Landlord does not repeat prior practices that cannot be justified.
This means real savings that stay with you – where it belongs.
Whether this is your first time conducting a Lease Expense Review, or you have engaged in a Lease Expense Review previously, this is a crucial year to initiate the practice.
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