This office lease clause should be used in an expense stop, stipulated base or office net lease. 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 for each lease year to determine what the building operating costs. Such an adjustment shall be made by the landlord increasing the variable components of such variable costs included in the building operating costs which vary based on the level of occupancy of the building.
Pennsylvania Gross Up Clause: Understanding its Role in Expense Stop Stipulated Base or Office Net Lease In a Pennsylvania commercial lease agreement, especially those related to expense stop stipulated base or office net leases, a crucial provision known as the Pennsylvania Gross Up Clause comes into play. This clause ensures fairness and transparency regarding the payment of operating expenses by tenants in multi-tenant commercial properties. With its implementation, landlords can equitably distribute expenses among tenants based on the leased area or other predetermined criteria. Types of Pennsylvania Gross Up Clauses for Expense Stop Stipulated Base or Office Net Lease: 1. Pro Rata Gross Up Clause: In this type of gross up clause, the expenses allocated to each tenant are adjusted proportionally according to their leased area. This means that tenants with larger spaces will bear a greater share of the operating expenses. The pro rata gross up clause ensures a fair allocation of costs that aligns with each tenant's usage and occupancy. 2. Expense Stop Gross Up Clause: In an office net lease agreement, the landlord generally sets a specified limit or expense stop, above which the tenants are responsible for contributing towards the additional costs. In this scenario, the expense stop gross up clause is utilized. It allows the landlord to estimate and set a maximum operating expense for the property, and any expenses beyond this limit are evenly distributed among the tenants. 3. Consumer Price Index (CPI)-Based Gross Up Clause: A CPI-based gross up clause is designed to account for inflation and changes in the Consumer Price Index over time. This clause enables the landlord to adjust the operating expenses annually or during specific intervals, ensuring that the tenants' proportionate shares stay in line with current market conditions. 4. Non-Recourse Gross Up Clause: In certain instances, lease agreements may include a non-recourse gross up clause, which restricts the landlord's ability to pass on certain operating expenses to the tenants. This clause ensures that specific costs, such as property improvements or repairs resulting from the landlord's negligence, remain the sole responsibility of the landlord. It is important to note that the specific type of Pennsylvania gross up clause to be used in expense stop stipulated base or office net leases will depend on the terms negotiated between the landlord and the tenant. Each type serves a distinct purpose, ensuring fairness and predictability in the allocation of operating expenses. As this description highlights, the implementation of a Pennsylvania Gross Up Clause in expense stop stipulated base or office net leases is crucial. It ensures transparent and equitable distribution of operating expenses among tenants within commercial properties.
