This office lease clause should be used in a base year lease. This form states that when the building is not at least 95% occupied during all or a portion of any lease year the landlord shall make an appropriate adjustment in accordance with industry standards of the building operating costs. This amount shall be deemed to be the amount of building operating costs for the year.
In the context of commercial real estate leases, an Arizona gross up clause is a crucial provision that should be included in a base year lease. This clause ensures that the tenant is not burdened with the variable operating expenses associated with the property beyond the base year. The gross up clause is intended to protect tenants from unexpected increases in operating expenses, such as maintenance, repairs, insurance, and taxes. The purpose of an Arizona gross up clause is to establish a fair distribution of operating expenses between the landlord and the tenant. It ensures that the tenant's responsibility for these expenses is proportional to their occupancy during the base year, rather than being affected by any changes in expenses in subsequent years. There are two main types of Arizona gross up clauses that can be used in a base year lease: 1. Expense Stop Gross Up Clause: This type of gross up clause limits the tenant's obligation to pay the increase in operating expenses up to a certain predetermined "expense stop" amount. Any increase in expenses beyond this amount is solely the responsibility of the landlord. 2. Proportional Share Gross Up Clause: This type of gross up clause calculates the tenant's share of operating expenses based on their proportional occupancy of the property during the base year. This ensures that the tenant's share remains constant, regardless of any fluctuations in total expenses. Both types of Arizona gross up clauses provide protection to tenants, but the choice between them depends on the negotiating power of the parties involved and their preferences regarding expense allocation. In conclusion, an Arizona gross up clause is an essential component of a base year lease that safeguards tenants from unexpected increases in operating expenses. By including this clause in the lease agreement, tenants can ensure a fair distribution of expenses and protect themselves from financial surprises.
