Office Base Year Stop Calculator

Base year and expense stop limit tenant exposure to expense increases.

Tenant sq ft

Base year opex $/sf

Current year opex $/sf

Expense stop $/sf

Tenant pays (base year)

$30,000

Tenant pays (stop)

$30,000

Annual increment $/sf

How the math works

Base year payment = sf × max(0, current − base). Stop payment = sf × max(0, current − stop).

10,000 × ($15 − $12) = $30,000. Stop set to $12: same result. Stop $14 = $10,000.

How to Use

Enter tenant sq ft.
Enter base year opex $/sf.
Enter current year opex $/sf.
Enter expense stop $/sf.
Read tenant pays (base year).

Frequently Asked Questions

Base year vs expense stop?

Base year (BY): tenant pays nothing in year 1; pays incremental expenses above year 1 baseline thereafter. Expense stop (ES): tenant pays nothing up to fixed $/sf threshold (e.g., $12/sf), pays incremental above. BY: rolling, resets each year vs year 1. ES: fixed for lease term. ES better when expenses rise; BY better in declining market. Major markets typical: BY for new leases, expense stop for renewals. Cap on year-over-year escalation: 3–8% common.

How does this asset class compare to traditional CRE?

Specialty assets (self-storage, RV parks, MHP, marinas, cold storage, data centers, parking, car wash, QSR/c-store, billboards, cell towers) typically offer higher cap rates than office/retail but with more operational complexity. They reward specialized operators with deep market knowledge. Lender pool is narrower, capital costs sometimes 50–150 bps higher, but downside resilience often better.

Capex and operational considerations?

Specialty assets often have heavier operational burden than passive triple-net retail. Self-storage, RV, MHP: tenant turn, security, basic upkeep. Marinas, parking, car wash: equipment-heavy with replacement reserves. Cold storage, data center: utilities are major cost. Billboards, cell towers: minimal opex, near-passive. Match management capacity to asset operational intensity.

Exit strategy?

Specialty asset cap rates have compressed significantly over last cycle but volatility is real. Buyers: REITs, private equity rollups, regional operators, 1031 buyers. Strong NOI history, environmental clarity (especially for car wash, gas station), and lease structure (for billboards, cell towers) drive valuation. Plan exit 24+ months in advance for best execution.