What are "operating expenses" in relation to a lease?

Operating expenses in relation to a lease refer to the ongoing costs associated with running and maintaining a property that are typically incurred during the course of normal business operations. These expenses can include costs such as utilities, maintenance, repairs, property taxes, insurance, and management fees. In certain lease types, such as gross leases or modified gross leases, these expenses may be covered by the landlord, while in others, like net leases, tenants may be responsible for paying a proportionate share of these costs.

Understanding the broader context of operating expenses is crucial for both landlords and tenants, as it affects the overall cost of leasing a property and can influence decisions regarding lease agreements. This knowledge helps in budgeting and financial planning for both parties involved in the lease.