Ask the Advisor: How Can I Maximize Escalation Income?

Escalation income usually represents a significant portion of an office building's revenue. That means owners should take time to ensure that they are collecting as much of the income as possible.

Reduce Billing Errors

It is not uncommon for tenants' escalation invoices to have errors, generally because the escalation method applied does not correspond with the method specified in the respective leases.

Escalation methods include:

• Base year with "gross up," where the tenant pays a portion of the expenses incurred beyond those incurred in a "base year," with the expenses adjusted to reflect the costs as if the building were fully occupied;
• Expense stop, where the owner's expenses are capped; and