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.
Nebraska Gross Up Clause in a Base Year Lease: A Comprehensive Description In a base year lease, a Nebraska Gross Up Clause is an essential provision that addresses the fair allocation of expenses among tenants in a multi-tenant commercial property. This clause ensures that each tenant pays their proportionate share of operating expenses, taking into consideration any variations in occupancy levels throughout the lease term. The purpose of the Nebraska Gross Up Clause is to account for potential vacancies during the base year upon which operating expense reimbursements are calculated. The base year typically refers to the first year of the lease term, during which the actual operating expenses are assessed and later used as a benchmark for future years. Under this clause, landlords adjust the operating expenses to what they would have been had the property been fully occupied throughout the base year. By doing so, the impact of vacant spaces on the operating expenses is negated, ensuring a fair distribution of costs among tenants. The Nebraska Gross Up Clause is meant to avoid penalizing tenants who have occupied their spaces continuously during the base year. The Nebraska Gross Up Clause can be categorized into two main types: 1. Full Gross Up: In this type, the landlord calculates the hypothetical expenses as if the property had been fully occupied throughout the base year. The expenses are adjusted by adding the costs associated with vacant spaces and deducting the costs attributed to common areas not used by any tenant. This approach ensures that each tenant pays their proportionate share of the total operating expenses. 2. Partial Gross Up: Unlike the full gross up, the partial gross up takes into account only the expenses incurred due to vacancies, excluding common areas' costs. This method is typically used when landlords prefer not to charge tenants for expenses related to common areas that are not utilized by anyone during the base year. Utilizing the Nebraska Gross Up Clause in a base year lease is crucial to promote fairness and equitable cost-sharing among tenants. It safeguards against the potential inequities that can arise if tenants are expected to bear the full burden of operating expenses, regardless of any vacancies or unused common areas during the base year. In conclusion, when negotiating a base year lease in Nebraska, it is essential to include a Gross Up Clause that outlines either the Full Gross Up or the Partial Gross Up approach. This clause ensures a fair distribution of operating expenses among tenants, accounting for variations in occupancy levels and potential vacant spaces during the base year. By incorporating this provision, both landlords and tenants can establish a mutually beneficial and transparent lease arrangement.
