[Rain Man]

Okay, I've been doing some research on this, and here's the deal.

First, I'm a bit of a moron, and I'm really not too happy with my initial Realtor who negotiated my lease.

The lease says that the landlord pays all utilities and other stuff, but then has an "operating cost" adjustment built in. Long story short, they pay all building expenses at 2005 rates, but any increases are covered by us based on our proportion of the building. I asked my Realtor what the impact of this was, and she said, "Oh, it's small. No big deal." And for the first couple of years, it was small. But with inflation, every year builds on top of the previous year, so it gets larger over time.

I'm not happy about that, because essentially it ensured that my rent was going to go up quickly over time. We had a regular rent increase built in, but this comes on top of it, so I'm getting a double whammy on costs, ensuring that my lease cost will go up faster than inflation.

That's my fault, though. I should've figured it out, but this was my first real commercial lease. The Realtor was a friend of ours, and so I can't really go back and nail her. We even had an attorney review it, and he never said anything about this. Everything I was told was that it was nothing to worry about and was a minor thing.

However, the rest of the story is that it wouldn't have been good, but it wouldn't have been intolerable if the landlord wasn't stating massive increases in costs. According to the documentation they've provided over the years, their reported water costs have tripled in three years, as have their building maintenance costs and insurance costs. The cost of "supplies" has gone up by 57% per year, even though it's small. Other costs have gone up significantly faster than inflation as well. The only thing that has gone up slower is property taxes, which haven't really changed.

Overall, their records show an annual increase of almost 12 percent per year in costs, when Denver's inflation rate over that time has been about 3 percent per year. This is all being added directly to the tenants' rents, and it's going up exponentially. In looking at our records, my earlier increases were along the lines of $30 to $80 per month. Last year it went to $400 and this year it went to $2,100.

Methinks I'm going to definitely demand the files that show all those costs tripling in three years. And even if they can provide receipts, I wonder if I can make a claim that the lease assumes good-faith management on their part, and if they're that bad at managing a property, then I shouldn't have to pay for their incompetence.

Here's another kicker. They initially had a clause in our lease that would've increased it further if the building was less full. So for example, if the health club moved out of their five floors, we would've had to double our cost to account for half the building being vacant. At the time, we couldn't even decipher the legalese (and the lawyer couldn't either), but we knew we didn't want anything that raised our costs if the building wasn't leased, so we had it taken out. If we hadn't, we would've been assessed another $200 or $300 a month on top of the $2,100.