Utility Escalation Pass-Through Calculator

Utility cost inflation passes through to tenants under expense-stop leases. This calculator sizes recovery.

Current utility (annual)

Base year utility

Occupied SF

Total building SF

Tenant pass-through

$5,000

Total escalation

$16,000

Escalation / SF

How the math works

Pass-through = utility escalation × tenant share. Heavy utility users may warrant submetering.

If utility costs exceed 8-10% of operating expense, consider submetering for the largest users. It removes LL risk and shifts behavior — tenants conserve when they pay directly.

How to Use

Enter current utility bill.
Enter base year utilities.
Enter occupied SF / total SF.
Read escalation pass-through.

Frequently Asked Questions

Utility volatility?

Electric: 3-8% typical annual. Gas: 5-15% volatile. Water/sewer: 4-6%. Deregulated markets can spike. Locking-in contracts reduces pass-through spikes.

Submetering alternative?

Direct bill tenant. LL carries no utility burden. RUBS (residential) or tenant direct contracts (commercial). Cleaner but harder to implement.

CAM vs utilities?

CAM = common area only. Utilities often split: common area metered through LL, tenant space direct metered. Lease specifies allocation.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.