Leasing Non-residential Real Estate Business Guide
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We documented 24 challenges in Leasing Non-residential Real Estate. Now get the actionable solutions — vendor recommendations, process fixes, and cost-saving strategies that actually work.
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All 24 Documented Cases
Systematic under‑recovery of operating expenses from tenants
Cresa white paper examples show individual office tenants recovering six figures in overcharges per building; scaled across a multi‑property portfolio, under‑recovery or forced credits commonly reach hundreds of thousands to millions of dollars annually.Landlords frequently fail to bill all allowable operating expenses (CAM, taxes, insurance, admin fees) or mis-allocate them, leading to recurring under‑recovery relative to what the lease permits. Industry guidance notes that poor record‑keeping, misallocated expenses, and failure to document tenant-specific exclusions routinely cause under-recovery and legal exposure in CAM/opex reconciliations.
Forfeited tenant improvement allowance due to poor tracking
Common TIAs range from $10–$50 per square foot; for a 10,000 sq ft space this is $100,000–$500,000 of which a material share can be forfeited if deadlines or documentation are missed.[1][6][10]Tenants regularly lose part or all of their tenant improvement allowance (TIA) because they miss documentation or reimbursement deadlines, or fail to submit complete packages, so negotiated funds are never reimbursed. Landlords may also avoid paying because tenants cannot prove costs or compliance with lease terms.
Legal exposure and settlements from improper CAM/opex allocations
While many matters settle privately, reported disputes often involve six‑figure overcharge claims per property; associated legal fees and negotiated settlements can push total impact into the high six or low seven figures over multi‑year periods for a landlord with several contested sites.Law and advisory articles warn that common CAM reconciliation errors—such as including non‑recoverable expenses, misallocating costs between tenants, or ignoring exclusion clauses—can trigger disputes, audits, and legal actions. Tenants have successfully challenged reconciliations, forcing landlords to reverse charges, pay interest, and occasionally cover tenants’ audit and legal costs.
Padding of CAM/opex pools and misclassification of expenses
Tenant audits cited in advisory materials often recover 5–15% of annual CAM/opex charges as ineligible; for a tenant paying $300k in annual recoveries, this equates to $15k–$45k per year, and proportionally more for large anchors or multi‑site portfolios.Tenant‑advocacy white papers describe repeated findings where landlords include ownership costs, capital improvements, or unrelated corporate overhead in recoverable CAM/opex pools, beyond what leases allow. While sometimes attributable to error, the pattern of systematic, tenant‑unfavorable inclusions across portfolios indicates gray‑area practices that benefit landlords at tenants’ expense until challenged.