This office lease form describes an operating cost escalations provision.In the event that the operating costs for any calendar year during the term of this lease shall be greater than the base operating costs, the tenant will pay to the landlord additional rent of an amount equal to such an increase.
The Arizona Operating Cost Escalations Provision is a contractual agreement that outlines the terms and conditions related to the increase in operating costs for a particular property or business located in Arizona. This provision is commonly found in commercial leases and other agreements between landlords and tenants. The purpose of the Arizona Operating Cost Escalations Provision is to ensure that the landlord can recover any increases in their operating costs associated with the property and pass them on to the tenant. It protects the landlord from financial burden resulting from rising expenses, such as property taxes, insurance premiums, maintenance and repair costs, utilities, or any other costs associated with running and maintaining the property. There are different types of Arizona Operating Cost Escalations Provisions that can be implemented: 1. Fixed Percentage Increase: This provision stipulates a fixed percentage by which the operating costs will increase over a specified period. For example, the lease agreement may state that operating costs will increase by 3% annually. 2. Consumer Price Index (CPI) Adjustment: This provision ties the increase in operating costs to the fluctuations in the Consumer Price Index. The CPI is a measure of inflation and reflects changes in the average price level of goods and services over time. The lease agreement may state that operating costs will increase in accordance with the fluctuations in the CPI. 3. Actual Cost Increase: This provision allows for the pass-through of the actual increase in operating costs without any predetermined formula. The landlord will provide the tenant with documentation supporting the cost increase, such as invoices, receipts, or statements of expenses. It's important for both landlords and tenants to carefully review and understand the Arizona Operating Cost Escalations Provision before entering into any agreement. The provision should clearly define which operating costs are eligible for escalation, the method of calculating the increase (whether it's fixed, tied to CPI, or based on actual costs), the frequency of adjustment, and any limitations or exclusions on the pass-through costs. By implementing the Arizona Operating Cost Escalations Provision, landlords can ensure that their operating costs are properly compensated and tenants can have a clear understanding of the potential increases in their lease obligations. This provision helps maintain a fair and transparent relationship between landlords and tenants in Arizona's commercial real estate market.
