It's a tenant's market

Look at Houston's Mid-year 2004 office statistics!
Our Class "A" and "B" market reports show that it's a fine time to be a tenant in Houston.

Audit your lease

A guest article from our Strategic Alliance Partner CRS Inc., by Anthony F. Collura, VP lease services.

When negotiating the terms of a new lease, it is important for tenants to include language specifying their rights regarding lease expense audits. The inclusion of an audit clause in the lease avoids a potential misunderstanding of a tenant's rights to receive and review detailed information on the landlord's building operating and common area costs. Without an appropriately crafted audit clause, a tenant could face charges on an operating statement that can't be verified.

The lease should include language that says the landlord will furnish the tenant with information to verify operating expenses and give the tenant and its authorized representatives the right to audit the landlord's records with respect to operating expenses. The clause should also provide for landlord reimbursement of tenant's audit expenses if an audit discloses a significant overcharge.

Some negotiation may be required as landlords generally try to severely limit audit clauses. Negotiation points would include:

• The amount of time that tenant has from the receipt of the operating statement to conduct an audit.
• The percentage of error required before the landlord has to reimburse the cost of the audit.
• The dollar limit of cost reimbursement of the audit.
• The number of years available to audit.

We also recommend some type of dispute resolution process, such as arbitration. While it is rarely needed, it does act as a preventative measure against stalling and is usually less costly and time-consuming than litigation.

Class A market statistics

Source: CoStar Property

Class B market statistics

Source: CoStar Property