By Denice Michel
With daylight savings time in full swing and temperatures finally above freezing, tenants are bidding farewell to shoes ruined by salt, tires destroyed by potholes, and skin roughened by the bitter cold.
But tenants will likely continue to see the effects of the 2013-2014 winter in their office complex and rent statements for many months to come.
Snow removal costs for this winter were more than double the budgeted amounts for most suburban properties. These extraordinary costs are causing owners to delay or scrap altogether planned capital improvements for properties. This means that any planned lobby renovations, restroom upgrades, fitness center additions, food service, etc. may be on hold for the foreseeable future. Additionally, tenants should expect to see increased operating expense billings for 2014.
Conversely, tenants that are in the first year of their lease term may benefit financially from the high snow removal costs this year. These tenants may have an unusually high operating expense stop due to the snow removal costs.
Assuming this year’s snowfall is not the new normal (fingers crossed), operating expenses over the next few years should be slightly lower than 2014.