Commercial Common Practice?????

[Sierra Westrick]

I do not deal with Commercial sales or leases but is it Common practice for the price per sq foot to include the cost of additional fees (ex:maintenance fees, water, garbage etc etc)? 

Or is this a stupid question???  

[Oren K.]

Sierra,

As Joel says, different animal but still an animal (e.g. not vegetable ;). A couple of point for you to consider;

Firstly, as with any commercial agreement, virtually everything not regulated by law is negotiable. At the end of the day, a willing Buyer and a willing Seller are what makes a market.

Secondly, just as there is a current CAP rates at any given time in a given area to help price RE, there are also for lack of a better phrase, 'market norms' in leasing; both residential and commercial. For example, if every building in the city included all utilities, you will be hard pressed to NOT include utilities. As another example, if all the rentals have dishwashers, you will have to give a substantial discount if you are not offering a dishwasher.

Similarly with commercial leases, what cost are included or excluded is to a large degree set by the local market (e.g. General Garbage pickup). The type of tenant also is consideration. For example, a strip plaza provides garbage pickup but does not have a restaurant as a tenant. They get an offer to lease from a restaurant. They may (and often do) have the restaurant get separate tenant-paid pickup since the restaurant will generate a lot of waste (Packaging, Organic waste, Oil waste, etc.).

It, as always, also depends on availability. If an area was in high demand but now has vacancies, the norms are likely to change so the spaces get filled.

You did not provide a lot of context for your question so my general advice is to call a few local commercial agents and find out what the local market norms are. Also find out what the buildings that are your competition do.

Good luck,

Oren