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.
Kansas Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease A Kansas Gross Up Clause is an important provision within an Expense Stop Stipulated Base or Office Net Lease agreement. This clause outlines the mechanism by which the landlord can adjust the tenant's share of operating expenses to account for vacancies, thus ensuring fair allocation of costs among all tenants. It aims to prevent an unfairly distributed financial burden on the remaining tenants when vacancy levels increase in the building. The purpose of a Kansas Gross Up Clause is to enable the landlord to "gross up" the tenant's expenses to reflect a hypothetical level of occupancy, typically at 95%, even if the actual occupancy is below that benchmark. This is done to ensure that the remaining tenants do not bear an undue burden of increased costs due to vacancies. There are several variations of Kansas Gross Up Clauses that can be used in an Expense Stop Stipulated Base or Office Net Lease. Some common types include: 1. Proportional Gross Up: Under this type of Kansas Gross Up Clause, the tenant's share of expenses is adjusted in proportion to the actual occupancy level. For instance, if the building is only 80% occupied, the tenant's expenses would be increased by a factor of 1.1875 (95%/80%). 2. Expense Cap Gross Up: This type of Kansas Gross Up Clause imposes a cap on the increase in a tenant's expenses due to vacancies. For instance, if the predefined cap is set at 10%, the tenant's expenses would not be adjusted beyond 10% of their actual share, even if the occupancy falls below 95%. 3. Flat Rate Gross Up: In this type of Kansas Gross Up Clause, a fixed percentage is added to the tenant's expenses, regardless of the level of occupancy. For example, if the flat rate is set at 5%, the tenant's expenses would be increased by 5% irrespective of the actual occupancy. Kansas Gross Up Clauses provide a fair and equitable approach to expense allocation, taking into consideration the fluctuating occupancy levels in commercial properties. By implementing appropriate Gross Up Clauses, landlords can ensure that tenants are not unfairly burdened when vacancies occur.
