There is more to OPEX than rates and insurance

Very often when advising tenants of the operating expenses on a property, we tend to gloss over any potential expenses other than rates and insurance. Which of course makes it difficult during the tenancy when on-charging to tenants, expenses for building maintenance which have not been spelled out in detail from the start.

Rates and Insurance are obviously the largest costs. However, no matter how much some developers may like to talk about “low maintenance” buildings, there really is no such thing. A building is only as good as it’s maintenance. When proper maintenance of a building is infrequent or non-existent, the building will age significantly faster and look much worse. Modern buildings are so much more than just a roof and walls. Those other components, and they include landscaping, roller doors, air conditioning, building and roof washing on even the most basic of buildings, need to be done to maintain a building. Whilst there are some landlords who are prepared to run their buildings down with a lack of maintenance, Expedio is not one of those. Our view is a standard lease calls for the tenant to meet the costs of maintenance, and therefore it is appropriate that the maintenance is undertaken in a timely manner. Which means  that we need to be emphasising not just rates and insurance, but also “building and services maintenance” as part of the overall operating expenses.