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.
A Delaware Gross Up Clause is a crucial element to consider when drafting a base year lease. This clause serves to delineate the responsibilities and calculations related to the tenant's share of operating expenses, ensuring a fair allocation of costs between the landlord and tenant. By incorporating a Delaware Gross Up Clause into a lease agreement, both parties can mitigate potential discrepancies that may arise during the base year calculation process. The Delaware Gross Up Clause essentially sets forth the methodology for adjusting a tenant's operating expenses to account for fluctuations in occupancy levels within a given property. This adjustment is necessary to ensure that tenants are not unfairly burdened with expenses related to vacant or underutilized areas of the property. Instead, these costs are proportionally allocated amongst the occupied areas, creating an equitable distribution of expenses. There are several types of Delaware Gross Up Clauses that can be used in a base year lease, each catering to specific circumstances and lease structures. Some common variations include: 1. Full Floor Gross Up: This type of clause is applicable when a tenant leases an entire floor within a multi-tenant building. It enables the tenant to benefit from the vacant spaces on the floor, proportionately reducing their operating expenses. 2. Partial Floor Gross Up: When a tenant leases a portion of a floor or a specific area within a larger space, a partial floor gross up clause is more relevant. This clause ensures that the tenant's costs are adjusted to reflect the actual occupancy of the floor. 3. Building-Wide Gross Up: This type of Delaware Gross Up Clause is suitable for tenants occupying an entire building. It enables them to account for expenses related to vacant spaces within the building, making their allocated operating expenses fair and reasonable. 4. Prorate Gross Up: In situations where tenants lease multiple units or a combination of spaces, a pro rata gross up clause effectively calculates their operating expenses based on the occupancy levels in each unit. This ensures that the tenant's expenses are directly proportional to their utilization of the leased space. Including a Delaware Gross Up Clause in a base year lease provides clarity and transparency for both landlords and tenants regarding operating expenses. By selecting the appropriate type of gross up clause that aligns with the lease structure and occupancy levels, potential disputes and discrepancies can be avoided. It is important to consult legal experts while formulating and incorporating a Delaware Gross Up Clause to ensure its compliance with the applicable laws and regulations.
