controllable expenses

controllable expenses

Real estate expenses one may manage and keep as low as practical under the circumstances.For an office building,controllable expenses would be things like janitorial services,office personnel,and,to a limited extent,electricity.The most common noncontrollable expense is real estate taxes. Most contracts or leases will define what they mean by controllable expenses, without regard to what the common understanding of the phrase might be.The phrase is important because many commercial leases require tenants to pay their pro-rata share of increases in building expenses each year.Wise tenants will negotiate an upper limit on the contributions; wise landlords will insist that the “cap”apply only to controllable expenses.