Following payroll, occupancy costs represent the highest expense category for multi-unit operators. To keep Occupancy costs as low as possible, its critical to verify that balances are correct, the right calculations have been applied and all the billbacks align with the lease language. When a seasoned team audits all lease related occupancy costs and manages payments on an ongoing basis, you’ll pay just what you owe based on the lease terms. These savings typically multiply throughout the life of the lease.
Most occupancy cost items fall into one the following categories:
- Real Estate Taxes
Most real estate taxes are billed through landlords using a pro rata share. Make sure the calculations outlined in the lease language are checked to ensure you are only paying taxes from the rent commencement date forward. Once the billing method is confirmed and baseline amounts have been established, continually watch for changes in the tax bills. When there is no apparent reason for a significant increase, it’s critical to understand why, in which case a tax appeal is likely warranted.
2. Insurance Reconciliations