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Have a commercial real estate question that you can't find the answer to? Just ask us! Send an email to info@mkcam.com or call us at (562) 432-7000.
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Articles
Have questions you can't find the answers to? View the following articles by President and Managing Principal, Michael ("Mickey") McClune, RPA®, FMA®, which give expert insight into the Commercial Real Estate industry from the Property Management and Consulting Services side of the business.
General
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Outsourcing
Enhance Your Company’s Bottom Line Through Effective Cost Containment Strategies
The one constant in the business world is change. The very forces that drive the world’s economy create pressure on companies to continually change the way they do business in order to increase efficiency, decrease costs, and improve performance – in short, to survive, not to mention prosper.
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Consulting Services
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Property Acquisition Due Diligence
Abstract Those Leases Professionally ... or Else!
Can you imagine having invested hundreds of thousands, or millions, of dollars in a major commercial real estate property and not knowing exactly what’s in all those lease contracts that you’ll be inheriting and having to live with for years?
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CAM/OE Escalations
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Understanding the Types of CAM/OE Escalations
As any experienced commercial real estate professional knows, “Operating Expense Escalations” (also known as Operating Cost Escalations or CAM/OE Escalations) – the share of a property’s/building’s operating expenses charged to a tenant – can be the single most confusing, argumentative, and incorrectly applied element of a tenant’s lease, both during lease negotiations and during a tenant’s actual occupancy in the building.
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Operating Cost Escalations
An Overview
From the Background of "Operating Cost Escalations", to The Steps, and 10 Biggest Mistakes, read on for everything you need to know about Operating Cost Escalations.
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Operating Cost Escalations
Top 20 Mistakes
From the Top 10 Mistakes in Escalating Operating Expenses, to the Top 5 Mistakes in Avoiding an Auditor, Top 5 Mistakes in Dealing with an Auditor, and Strategic Implications Relating to OE Escalations, learn key mistakes to avoid for success.
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What's Escalatable?
The CAM/OE Escalation process must be done carefully, taking whatever amount of time is needed to “do it right” per the lease provisions and “industry standards”, computed in accordance with the procedures specific to the type of CAM/OE Escalation mandated by the lease, and including only those expenses that are “escalatable” while fully excluding all expenses that have been deemed “non-escalatable” not only by the lease but also by those same “industry standard procedures”.
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Base Year Concept with a Gross Up
Operating Expense Escalations - "The Way They Are Supposed to be Done"
Office building leases containing expense escalation provisions based on the “Base Year Concept with a Gross Up to X% (e.g., “95%” or “100%”) of the Building/Project” require landlords to do a number of things so that their billed escalations comply with (i) the intent of the parties, (ii) industry standard practices, and (iii) the terms of the lease.
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Arming Yourself for a Tenant Audit
It's Coming, so be Prepared
Whether or not you’ve ever received that dreaded letter from one of your tenants that says “… Tenant hereby notifies the Landlord it intends to conduct an audit of the Landlord’s financial records … to evaluate the accuracy of the rental charges …”, know with certainty that someday you’ll be receiving (another) one.
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Capital - Can I Pass It Through?
What are capital expenditures, and how do they affect a commercial real estate property owner’s financial reporting (e.g., to the state and to the IRS for income tax purposes) versus can they be passed on/through to their property’s tenants (e.g., via “Operating Expense Escalations”)? Are they the same thing, and are they handled the same way in both situations? This article explores the proper treatment of “Capital” as a potential cost to be possibly reimbursed by commercial real estate tenants to their landlords.
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Fixed "CAMs"
An Idea Whose Time Has Come??
A few years ago an article in Shopping Centers Today discussed a shift in the retail real estate industry from the traditional “variable common area maintenance expense charge methodology” to one of “fixed” charges. Is this a good idea, and would this be a good idea for office and industrial properties?
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