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 Virginia Gross Up Clause is an important provision that should be included in a Base Year Lease in order to ensure fair allocation of operating expenses among tenants in a commercial property. This clause specifically pertains to the grossing up of expenses when the property is not fully occupied during the base year. In a Base Year Lease, the gross up clause accounts for the fact that operating expenses, such as property taxes, insurance, utilities, and maintenance costs, are usually calculated based on the total rentable area of the property. However, when the property is not fully leased, it would be unfair for the tenants to bear the burden of expenses that would have been allocated to the unoccupied space. There are different types of Virginia Gross Up Clauses that can be used in a Base Year Lease, depending on the specific needs and circumstances of the property. Some common forms of gross up clauses include: 1. Full Occupancy Gross Up: This clause ensures that the operating expenses are calculated as if the property were fully occupied, even if it is not. The landlord is responsible for bearing the expenses associated with unoccupied space. 2. Partial Occupancy Gross Up: In this case, the gross up clause allows for a partial adjustment of expenses based on the actual occupancy rate. The expenses are calculated proportionally to reflect the occupied and unoccupied areas of the property. 3. Comparative Market Rent Gross Up: This type of gross up clause determines the appropriate grossing up based on the market rent of any vacant space. If the market rent of unoccupied space is significantly higher or lower than the base year rent, the expenses are adjusted accordingly. 4. Pro Rata Gross Up: With this clause, the expenses are divided and allocated on a pro rata basis among both the occupied and unoccupied space. Each tenant bears the expenses in proportion to their share of the total rentable area. Including a Virginia Gross Up Clause in a Base Year Lease is crucial to ensure fairness and accuracy in allocating operating expenses. It protects tenants from shouldering costs associated with unoccupied spaces and provides a mechanism for adjustments based on occupancy rates or market conditions.
