Base Year vs Expense Stop: How Office Pass-Throughs Work
Office leases often include some operating expenses in the base rent and pass through only the increase. There are two ways to set the starting point.
Base year
The building's actual expenses in a named year are the base. Each later year the tenant pays its share of the excess: share × (this year − base year).
| Base-year (2024) building expenses | $480,000 |
|---|---|
| This year's expenses | $540,000 |
| Tenant share 10% | $54,000 − $48,000 = $6,000 pass-through |
Expense stop
A fixed amount per square foot. A 5,000 SF tenant with a $9.00/SF stop pays the expenses above $45,000 of its share.
Either way the pass-through can't go below zero. For partial years, both the share and the base are prorated by days. Enter either one per tenant in the base-year and stop calculator.