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.
San Antonio Texas Operating Cost Escalations Provision
State:
Multi-State
City:
San Antonio
Control #:
US-OL19034A
Format:
Word;
PDF
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How to fill out Operating Cost Escalations Provision?
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FAQ
For example, if the base year operating expenses are $5.00 per square foot and during the subsequent year, building operating expenses increase by 3 percent, the result is a $0.15 per square foot increase (5.00 x 103%=5.15). For a 3,500 square-foot lease, this would amount to an escalation payment of $525.00.
The pro-rata share is the percentage of expenses shared by the tenant for the shopping center or office building. In most leases, the pro-rata share is calculated as a fraction of the tenant's demised square footage divided by the total square footage of the shopping center or the building.
In real estate, the operating expense ratio (OER) is a measurement of the cost to operate a piece of property, compared to the income brought in by the property. It is calculated by dividing a property's operating expense (minus depreciation) by its gross operating income.
This clause determines when your lease payments will go up and how much they will cost you. While escalations might seem far away when you first sign your lease, they will come into play eventually. One of the first things that your lease escalation clause defines is when your lease payments will go up.
In a properly grossed-up expense, you would only expect to see normal 2-4% increases per year. However, if the expense was not properly grossed up, that figure could be significantly higher in the years ahead when occupancy increases and stabilizes.
Operating Expense Escalation means a sum payable by Tenant to Landlord each Lease Year computed by multiplying the sum representing the Base Year Operating Expenses as defined under Subsection A.
An increase in rent because a clause in the tenant's lease provides that as the building operating expenses increase above what they were in a base year,the tenant will pay its pro rata share of those increased expenses.
An escalation clause allows a contractor to impose price increases in materials upon the owner after a contract has been signed, thereby shifting the risk of absorbing the price increases from contractor to owner.
The Use Clause and Exclusive Clause A use clause limits how you'll use the rented space. The limitations can be as broad as what business you'll conduct there, as narrow as what specific services or products you'll offer, or as nebulous as the quality level of your operation.
Landlord may increase rent once every 12 months, limited to 3% of the current rent, or the regional Consumer Price Index (CPI), whichever is higher. Rent increases are expressly subject to the provisions of AB 1482 California Tenant Protections Act (Cal. Civ. Code §§ 1946.2 and 1947.12).
