Industrial Operating Expenses Explained

The topic of operating expenses comes up regularly in the world of commercial and industrial real estate. Anyone searching online for industrial properties has likely seen that some listings have NNN or OPEX charges. As industrial real estate agents here in northern Nevada, this kind of industry shorthand is second nature. But when we tour with prospective industrial tenants, it’s a question that comes up regularly – what is OPEX and what does it include?

Operating Expenses, or OPEX

Operating expenses, commonly called OPEX or NNN costs, are the building owner’s means of recouping building costs and expenses. An NNN lease is a lease structure in which the tenant is responsible for paying all operating expenses associated with a property. When a building owner has a triple net investment, they are not responsible for paying any operating expenses. In addition to a monthly base rental rate, tenants also pay OPEX expenses that reimburse the building owner for:

1. Taxes – including real property taxes

2. Insurance – including building insurance

3. Common Area Maintenance (CAM) – including but not limited to parking lot lighting, roof repair and replacement, trash disposal, pest control, landscaping, irrigation, snow removal, capital improvements, administrative costs

Common area maintenance generally covers areas of a building that are shared with other tenants, such as parking lots, landscaping areas, sidewalks, and trash areas, as well as any repair or maintenance needed to keep those areas in clean condition and good working order.

What OPEX does not cover are those expenses directly related to a tenant or 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 inside of your space. This includes all interior flooring, plumbing, electric, windows, doors, ceilings, and walls.

Your OPEX expenses should be clearly defined in your lease document to avoid any confusion down the road of what you will and will not be responsible for covering. A qualified agent will help you understand the process and your expected costs. If you are just getting started or established and looking to re-locate or expand your current facilities, let Beki Dobson at Miller Industrial Properties help you streamline your process.

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