Your Cheat Code to Owning CRE Real Estate
When it comes to managing multi-tenant retail and industrial properties, timing is everything. One area where I see landlords consistently fall behind is in reconciling operating expenses (CAM, insurance, taxes, etc.) against budget. Too often, owners wait until year-end to review the numbers — and that delay can cost you.
The Problem With Waiting Until Year-End
Most leases require that landlords deliver annual operating expense reconciliations within 60 days of year-end. That’s a very tight window. If you wait until December to review actuals, you leave yourself scrambling to finalize numbers, prepare tenant statements, and issue notices — all while dealing with auditors, year-end accounting, and closing out your own books.
More importantly, short notice leaves your tenants in the dark. If they’ve underpaid CAM or other NNN charges throughout the year, they suddenly face an unexpected bill. That’s not a conversation you want to have in February when cash is tight, budgets are closed, and frustrations are high.
Why Q3 Is the Sweet Spot
Here’s where Q3 gives you the edge:
- More Time, More Flexibility – Reconciling in the third quarter gives you an early look at actuals vs. budget. If you see a shortfall, you can start communicating with tenants now instead of dropping a surprise on them later.
- Tenant Relations – Tenants appreciate transparency. Getting ahead of the curve shows professionalism and creates space for productive conversations about true occupancy costs.
- Vacancy Hedge – In today’s softening market, vacancy is the biggest threat to your P&L. Identifying potential delinquencies or operating shortfalls earlier gives you more time to negotiate renewals, restructure leases, or even backfill space before the damage hits your NOI.
- Better Financial Planning – Owners and investors want clean numbers and fewer surprises. Early reconciliation reduces year-end stress and sets up a stronger, more predictable P&L.
Counterintuitive, but Profitable
At first glance, you might think: “Why review expenses before the year is even over?” But the reality is, vacancy kills profits faster than any line item expense. Giving yourself — and your tenants — more time to prepare, adjust, and respond is worth far more than squeezing every dollar out of a late reconciliation.
By leaning into Q3 as your “reconciliation season,” you set the stage for stronger relationships, fewer surprises, and a healthier bottom line.
Expenses you should be Forecasting
Insurance Policy Premiums; California continues to see increases in premiums
Utilities to common areas; Water & Sewer cost in the Bay Area have seen a significant increase in 2025
Unforeseen expenses; Surprise leaks, vandalism, insurance deductibles. Do you have a reserve established?
Managing multi-tenant industrial and retail assets is as much about timing and communication as it is about rent rolls and cap rates. The landlords who win are the ones who treat operating expense reconciliations not as a box to check, but as a proactive tool to protect NOI and strengthen tenant relationships.
So, don’t wait for December — start now. Your tenants (and your P&L) will thank you.
Need help? Contact Jessica and the team at Capex CRE Asset Management to discuss how we can assist with year end reconciliation, budgets, and streamlining your lease structure to recapture operating expenses.
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