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Commercial properties are leased by businesses for any commercial activity. Any property, if intended to be rented out to businesses by landlords, must attain permission from the municipality of the emirate it wishes to operate in.
Location is a prized feature of commercial properties for lease, with those on the main road in busy or upscale areas charging a premium per square foot. Tenants may rejoice in snagging a coveted property for their business, but it is best that they do not use up all the budget allocated for the lease on just the lease. Other property-associated costs can cost an arm and a leg, and these expenses need to be worked into the budget beforehand.
Service charges are an additional cost to the tenant that the landlord levies for the purpose of maintenance, cleaning and repair of all common areas of the building that include elevators, reception areas, floors, among others. They also cover security and other staff expenditure.
Utility costs, on the other hand, are the other operational costs that tenants must incur. These cover electricity and water bills, telephone and Internet costs, and are estimated to be around 30% of the total operating cost. These can, however, be reduced by adopting green initiatives throughout the organization and educating staff on sustainable practices.
Landlords of commercial properties in the UAE made news recently for charging tenants “improper” service fees to keep a leg up in the competitive market. They said their fees proved too meager to cover the costs of building maintenance or any repair work. Although this is one end of the spectrum, tenants must also be wary of overcharging landlords, and ensure that both parties are stringent about keeping up with their respective rights and responsibilities.
• Rent is just one of the expenses commercial tenants must bear
• Service fees are used for the maintenance and repair of buildings
• Utility bills make up roughly 30% of tenant’s total operating cost
Source: Bushra Hameduddin, Special to Properties
The writer is a freelancer