Operating expenses are a topic that regularly come up in the world of commercial and industrial real estate. Anyone searching for industrial properties online has most likely seen some listings that have additional NNN or OPEX charges. As industrial real estate agents here in the Reno/Sparks market, this kind of industry language is second nature to us but when we tour with prospective industrial users, this is a question that comes up often – what is OPEX and what does it include?
Operating Expenses, or OPEX
Operating expenses, most commonly called OPEX or NNN costs, are the building owner’s means of recouping building costs and expenses. A NNN lease is a lease structure in which the tenant is responsible for paying all operating expenses associated with a property through means of reimbursement. When a building owner has a triple net investment, they are not responsible for paying any operating expenses. In addition to the monthly base rent, tenants also pay OPEX expenses, per square foot of building leased, that reimburse the building owner for:
- Taxes – including real property taxes
- Insurance – including building and liability insurance
- Common Area Maintenance (CAM) – including but not limited to roof repair and replacement, parking lot lighting, trash services, pest control, irrigation, fire systems, landscaping, snow removal, capital improvements, property management, administrative costs
Generally, common area maintenance covers all areas of a property or project that are shared with other tenants, such as parking lots, landscaped areas, sidewalks, driveways, and trash areas, as well as the repair or maintenance needed to keep these areas in clean condition and good working order.
What OPEX does not cover are expenses that are related directly to the tenant and their leased space. OPEX does not cover separately metered gas, electricity, or water costs, nor does it cover any janitorial or repair costs for the interior of your space. This includes all inside flooring, suite specific plumbing, electric, windows, doors, ceilings, and interior walls.
Your operating expenses should be clearly defined in your lease document to avoid any confusion of what you as the tenant will and will not be responsible for covering. An experienced agent will help guide you through the process and your expected expenses. If you are just getting started in the Reno area or established and looking to re-locate or expand your current facilities, let the team at Miller Industrial Properties help you streamline your process.