What are common costs in commercial buildings – and how are they calculated?

Common costs are an important part of renting office space. Here, we explain what is included in common costs, how they are allocated among tenants, and what you should be aware of as a tenant or landlord.

What are common costs?

When you rent office space, there are often additional costs beyond the base rent. These are called common costs and cover the operation and maintenance of the building’s common areas and shared services. Typical examples include:

• Cleaning of common areas (e.g., entrance halls, corridors, and restrooms)

• Janitorial services and security

• Snow removal and maintenance of outdoor areas

• Electricity, heating, and other energy costs for shared spaces

• Elevator operation, ventilation, and other technical maintenance

In other words, common costs cover what is necessary for the property to function well for all tenants. They do not include costs related to each tenant’s private premises or equipment.

How are common costs calculated?

Common costs are usually based on an annual budget prepared by the landlord. Based on this budget, the tenant pays a monthly advance payment (known as «on account» payment).

At the end of the year, a reconciliation is made:

• If the actual costs were lower than budgeted, the difference is refunded to the tenant.

• If the costs were higher, the tenant is invoiced for the difference.

Allocation based on floor area

Costs are normally allocated according to a distribution key, often based on leased floor area. This means that each tenant pays a share of the common costs proportional to the size of the premises they rent compared to the building’s total leased area.

Example: If you rent 200 m² in a building with a total leased area of 2,000 m², you will cover 10% of the common costs.

Tips for Tenants

• Check the contract: Ensure it clearly specifies which costs are included in the common costs and how they are allocated.

• Request a budget: Ask the landlord for the annual budget and historical accounts for common costs.

• Review the reconciliation: Examine the annual reconciliation and ask questions if something seems unclear.

Frequently asked questions about common costs

What is usually included in common costs for office space?

Common costs typically cover costs for the operation and maintenance of common areas and services, such as cleaning, electricity, janitorial services, snow removal, and technical operations of the building. It can vary from one property to another, so always check what is specified in the lease.

How do I know the common costs I pay are correct?

The landlord must prepare a budget and send an annual reconciliation showing actual costs. You have the right to inspect accounts and supporting documents, and you can request documentation if anything is unclear.

Do I have to pay common costs even if I don’t actively use the common areas?

Yes. All tenants contribute proportionally based on the space they rent—regardless of how much they use the common areas. This is part of the commercial property leasing model.

How are common costs distributed among tenants in the building?

They are normally allocated based on leased area. For example, if you rent 10% of the building’s total area, you pay 10% of the service charges, unless otherwise agreed.

Can common costs change during the lease term?

Yes. Service charges are often budgeted and paid on account, so actual costs may be higher or lower than expected. Any changes are adjusted in the annual reconciliation.

Guidance and More Information

For a more detailed overview, see the updated common cost guidelines from Norsk Eiendom (Norwegian Property Federation).

If you have questions about common costs for a specific property, feel free to contact one of our advisers via Spacefinder.

About the Author

This article was written by Lauritz Kittelsen, an adviser at Spacefinder. He specializes in helping small and medium-sized businesses find or lease office space.