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 New York Operating Cost Escalations Provision is a clause commonly included in commercial leases in the state of New York, specifically in relation to operating expenses for a property. It outlines the methods through which the landlord can pass on increases in operating costs to the tenant. Under this provision, landlords may recover the rise in operating expenses by adding them to the tenant's rent during the lease term, usually on an annual basis. This provision protects landlords from shouldering the entire burden of cost increases associated with operating the property. There are various types of New York Operating Cost Escalations Provisions, some of which include: 1. Gross Lease Escalation: In this type of provision, tenants pay a fixed rent amount throughout the lease term, which includes operating expenses. However, the landlord has the right to increase the rental amount based on the rise in operating costs at a predetermined interval, typically on a yearly basis. 2. Base Year Escalation: This type of provision sets a base year for operating expenses, usually the first year of the lease. The tenant pays a fixed rent during the base year, covering operating expenses. However, any cost increases that occur in subsequent years are passed on to the tenant, who is required to pay the additional expenses through an escalated rent. 3. Direct Pass-Through: With this provision, the landlord directly passes the actual operating costs to the tenant. The tenant is responsible for paying the costs as they occur, or they may receive an invoice from the landlord on a monthly or quarterly basis. This type of provision offers transparency as tenants see the actual expenses incurred. 4. CPI (Consumer Price Index) Adjustment: In this provision, the tenant's rent is adjusted based on the changes in the Consumer Price Index. If the index increases, the rent is escalated accordingly. This method ensures that the rent increase is tied to the general cost of living, protecting both the landlord and the tenant from volatile changes in operating expenses. Overall, the New York Operating Cost Escalations Provision is a crucial component of commercial leases, enabling landlords to recover increased operating expenses and ensuring that tenants contribute appropriately to the ongoing costs associated with the property.
