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 Los Angeles California Gross Up Clause is a fundamental provision found in an Expense Stop Stipulated Base or Office Net Lease in Los Angeles, California. This clause typically aims to ensure that the tenant pays its proportionate share of operating expenses associated with the leased property. A Gross Up Clause is used to adjust and equalize the expenses in circumstances where the leased premises are not fully occupied, resulting in higher operating expenses for the tenant due to a reduced occupancy rate. The clause dictates the methodology for calculating and distributing operating expenses among the tenants. There are two primary types of Gross Up Clauses that could be applied in an Expense Stop Stipulated Base or Office Net Lease in Los Angeles, California: 1. Level Gross Up Clause: This clause allows the landlord to adjust the expenses to reflect a hypothetical level of occupancy. The operating expenses are calculated based on a predetermined occupancy rate, which is typically set at 95-100% of the total leasable area. This ensures that the tenant is not burdened with additional expenses resulting from vacant spaces within the building. 2. Actual Gross Up Clause: Unlike the Level Gross Up Clause, an Actual Gross Up Clause considers the actual occupancy rate of the building when calculating operating expenses. This clause considers the specific vacancy rate of the property to calculate the tenant's proportionate share of expenses. If the vacancy rate is high, the tenant's expense allocation will exceed that of a fully occupied building, reflecting the impact of the vacant spaces. Including a Los Angeles California Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease is crucial for both the tenant and the landlord. It ensures fairness in sharing operating expenses, regardless of the occupancy rate, and provides transparency in expense allocation. In conclusion, the Los Angeles California Gross Up Clause is an essential element in a commercial lease agreement. By implementing the appropriate type of Gross Up Clause, tenants and landlords in Los Angeles can accurately and fairly allocate operating expenses based on the occupancy rate of the property.A Los Angeles California Gross Up Clause is a fundamental provision found in an Expense Stop Stipulated Base or Office Net Lease in Los Angeles, California. This clause typically aims to ensure that the tenant pays its proportionate share of operating expenses associated with the leased property. A Gross Up Clause is used to adjust and equalize the expenses in circumstances where the leased premises are not fully occupied, resulting in higher operating expenses for the tenant due to a reduced occupancy rate. The clause dictates the methodology for calculating and distributing operating expenses among the tenants. There are two primary types of Gross Up Clauses that could be applied in an Expense Stop Stipulated Base or Office Net Lease in Los Angeles, California: 1. Level Gross Up Clause: This clause allows the landlord to adjust the expenses to reflect a hypothetical level of occupancy. The operating expenses are calculated based on a predetermined occupancy rate, which is typically set at 95-100% of the total leasable area. This ensures that the tenant is not burdened with additional expenses resulting from vacant spaces within the building. 2. Actual Gross Up Clause: Unlike the Level Gross Up Clause, an Actual Gross Up Clause considers the actual occupancy rate of the building when calculating operating expenses. This clause considers the specific vacancy rate of the property to calculate the tenant's proportionate share of expenses. If the vacancy rate is high, the tenant's expense allocation will exceed that of a fully occupied building, reflecting the impact of the vacant spaces. Including a Los Angeles California Gross Up Clause in an Expense Stop Stipulated Base or Office Net Lease is crucial for both the tenant and the landlord. It ensures fairness in sharing operating expenses, regardless of the occupancy rate, and provides transparency in expense allocation. In conclusion, the Los Angeles California Gross Up Clause is an essential element in a commercial lease agreement. By implementing the appropriate type of Gross Up Clause, tenants and landlords in Los Angeles can accurately and fairly allocate operating expenses based on the occupancy rate of the property.
