National Lease Advisors President, Ed Muna, shares lessons learned from helping public companies adopt the new ASC 842 lease accounting standard.
It is not uncommon for tenants to need to sublease their space. Here are six items to consider when subleasing space.
As a result of the COVID-19 pandemic, many companies have negotiated rent deferrals with their landlord. Under a normal environment, ASC 842 would require a remeasurement of the right of use asset and lease liability. Of course, this is not a normal environment.
Operating expense traps like the Base Year reset can be confusing and easy to overlook. That is why it is critical that companies bring in a tenant representative on all lease transactions, including what may seem like an easy renewal.
Under normal circumstances, a 2-4% increase in operating expenses could be expected. However, in our current COVID-19 environment where businesses are struggling to control costs, properties should be looking to keep CAM budgets flat for the upcoming year.