Estimating Expenses - Rules of Thumb- Office Warehouse example

[Eric Benzenhoefer]

What is a good way to estimate expenses in an office warehouse park, $5MM+?

My partner and I are looking at one in Houston with the expenses and deductions totaling ~45% of the gross potential rent of the property:

That includes

• 10% for vacancy allowance
• 15% for planned and unplanned maintenance (lawn, CAM, repair allowance)
• 7% for property management
• 12% for Taxes and Insurance

Posted deals often excluded expenses, so I want to ask the BP community for wisdom.

Questions:

1. To the experienced eye out there, how does those expense %’s look?
2. What items are not accounted for in the expenses?
3. What rules of thumb do you use for your preliminary "deal or no deal" analysis of a property?
4. Are there any books out there on this real estate asset class?