We’re finalizing 2025 budgets on an 82k SF office in Dallas, and utility costs are up 18%, so I’m leaning toward CPI+2% rent bumps and a 5% non-cumulative OPEX cap in renewals to keep variance in check. How are you balancing escalation clauses with realistic expense pass-throughs in your leases, and are you seeing pushback if janitorial moves from base year to NNN?
I’d pair CPI bumps with a 3% floor/6% ceiling and exclude utilities/insurance from the 5% OPEX cap, with quarterly true-ups and tenant audit rights. Are you submetering suites or at least tracking after-hours to separate behavior from rate spikes? If you “move janitorial from base year to NNN,” offer a 3–6 month rent credit or phased-in scope so it lands like a Band-Aid, not a surprise tax.