Commercial Property Tenants Abroad Facing Increased Service Charges

Commercial Property Tenants Abroad Facing Increased Service Charges



Although it may not be hitting all commercial property tenants in the U.S. with the same intensity, market forces are pushing an increase in service charges (known as CAM costs in the U.S.) for commercial property tenants in Scotland.

According to Jones Lang LaSalle’s latest Office Service Charge Analysis report, which analyzes the cost to run the common parts of offices, shopping centers, and retail parks, shows a sharp rise in running costs:

Service charges are up on average by more than 7% in shopping centers, and between 12% and 22% in retail parks.

Service charges for air-conditioned office buildings have risen by 5.1% a year over the last ten years, and service charges for non-air-conditioned buildings have risen by 8.3% a year over the last five years.

“Economic costs are pushing occupational costs forward,” explained David Rodger, who is with Jones Lang LaSalle’s Property Management team in Glasgow. “Tenants are now bearing the brunt of gas and electricity prices rising ahead of inflation and increasing costs over manual labor. Risk management and statutory compliance also result in additional costs to the private sector.”

Rodger noted that rising service charge expenditure in Scotland is particularly prevalent in shopping centers as with increasing competition, owners now need to continually maintain their properties to keep them ahead of the latest development.

The Office Service Charge Analysis report is based on a survey of 235 buildings with 21.4 million square feet of leasable space across the UK. The Retail report is based on a survey of 104 shopping centers totaling 36.2 million square feet, and the Retail Park report covers 231 parks totaling 34.75 million square feet across the UK.

Copies of the report are available at www.oscar.joneslanglasalle.co.uk.

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