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.
A New Jersey Gross Up Clause is a crucial provision that should be included in an Expense Stop Stipulated Base or Office Net Lease. It ensures fair allocation of expenses and protects both landlords and tenants from unexpected increases in operating costs. This clause allows landlords to increase a tenant's base rent or operating expenses to cover any rise in taxes, insurance premiums, utilities, or other common area maintenance (CAM) charges. There are two main types of New Jersey Gross Up Clauses commonly used in leases: the Direct Gross Up Clause and the Market Gross Up Clause. 1. Direct Gross Up Clause: This type of gross up clause enables landlords to directly pass on any increase in operating expenses to tenants. It requires the tenant to pay their proportionate share of the increased costs based on the ratio of their leasable square footage to the total leasable square footage in the property. Example: If a tenant occupies 10,000 square feet in a building with a total leasable area of 100,000 square feet, they would be responsible for 10% of any increased operating expenses. 2. Market Gross Up Clause: The Market Gross Up Clause provides landlords the flexibility to allocate increased expenses based on market rates rather than solely on square footage. It allows landlords to compare operating expenses of the current year to those of a "base year" and adjust leases accordingly. Example: If the base year is set as the year of the lease signing and operating expenses increase by 5% in subsequent years, the tenant would be responsible for their share of the 5% increase calculated based on their remaining lease term. Including either type of New Jersey Gross Up Clause protects the respective rights of landlords and tenants and ensures a fair distribution of rising expenses throughout the lease term. By using relevant keywords such as "New Jersey Gross Up Clause," "Expense Stop Stipulated Base," "Office Net Lease," and "types of Gross Up Clauses," both parties can better understand their rights and obligations regarding shared operating expenses in New Jersey lease agreements.A New Jersey Gross Up Clause is a crucial provision that should be included in an Expense Stop Stipulated Base or Office Net Lease. It ensures fair allocation of expenses and protects both landlords and tenants from unexpected increases in operating costs. This clause allows landlords to increase a tenant's base rent or operating expenses to cover any rise in taxes, insurance premiums, utilities, or other common area maintenance (CAM) charges. There are two main types of New Jersey Gross Up Clauses commonly used in leases: the Direct Gross Up Clause and the Market Gross Up Clause. 1. Direct Gross Up Clause: This type of gross up clause enables landlords to directly pass on any increase in operating expenses to tenants. It requires the tenant to pay their proportionate share of the increased costs based on the ratio of their leasable square footage to the total leasable square footage in the property. Example: If a tenant occupies 10,000 square feet in a building with a total leasable area of 100,000 square feet, they would be responsible for 10% of any increased operating expenses. 2. Market Gross Up Clause: The Market Gross Up Clause provides landlords the flexibility to allocate increased expenses based on market rates rather than solely on square footage. It allows landlords to compare operating expenses of the current year to those of a "base year" and adjust leases accordingly. Example: If the base year is set as the year of the lease signing and operating expenses increase by 5% in subsequent years, the tenant would be responsible for their share of the 5% increase calculated based on their remaining lease term. Including either type of New Jersey Gross Up Clause protects the respective rights of landlords and tenants and ensures a fair distribution of rising expenses throughout the lease term. By using relevant keywords such as "New Jersey Gross Up Clause," "Expense Stop Stipulated Base," "Office Net Lease," and "types of Gross Up Clauses," both parties can better understand their rights and obligations regarding shared operating expenses in New Jersey lease agreements.
