A fixed dollar amount per square foot above which the tenant is responsible for paying operating expenses. The landlord covers all operating costs up to the stop; the tenant pays anything above it.
An expense stop functions like a deductible — the landlord absorbs the first dollar of operating costs up to the agreed threshold, and the tenant bears the excess. It is common in full-service or gross lease structures as a cap on the landlord's exposure. For instance, if the expense stop is $12.00 per square foot and actual expenses total $14.50, the tenant pays $2.50 per square foot. Unlike a base year, the stop is a fixed amount rather than an actual historical figure, so inflation erodes the landlord's protection over time.
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