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.
The Texas Gross Up Clause is a vital component in a Base Year Lease agreement, offering a method to accurately calculate and allocate operating expenses for commercial tenants. It allows for adjustments to account for fluctuations in the property's operating costs, ensuring fairness and transparency in cost distribution. One type of Texas Gross Up Clause commonly used in Base Year Leases is the Expense Stop Gross Up Clause. Under this clause, the landlord sets a predetermined expense stop limit which, once reached, triggers the gross up mechanism. When the total operating expenses exceed the set limit, the excess costs are proportionally allocated among the tenants, based on their rentable square footage or other agreed-upon methodology. Another type is the Pro Rata Gross Up Clause, which distributes the increased costs proportionally to all tenants, regardless of whether they have reached the expense stop limit. This clause ensures that each tenant shares the added expenses in relation to their occupied space. The Texas Gross Up Clause provides a fair and equitable solution to accommodate changes in operating expenses throughout the lease term. By incorporating a Gross Up Clause in a Base Year Lease, tenants are protected from unexpected financial burdens resulting from unforeseen escalations in operating costs. It allows for a more accurate representation of true expenses during the base year, enhancing transparency and facilitating smoother lease negotiations and renewals. Keywords: Texas Gross Up Clause, Base Year Lease, operating expenses, commercial tenants, Expense Stop Gross Up Clause, Pro Rata Gross Up Clause, fluctuations, cost distribution, predetermined expense stop limit, total operating expenses, proportionally allocated, rentable square footage, fair and equitable solution, lease term, financial burdens, escalations, transparency, lease negotiations, lease renewals.
