|
As we try to stay abreast with market changes and their impact on lease language, we want to pass along items to help tenants negotiate during this soft economy.
In this issue, we wish to address some nuances about operating expenses. In the past, we have talked about the validity of having operating expenses "grossed up," whereby the landlord estimates the operating expenses as if the building were fully occupied. In this way, he fairly determines the increased cost to be passed along to tenants. We previously recommended both the base year and subsequent lease years should be grossed up to 95% occupancy. However, more recently we learned about two additional factors:
1. A building should always be grossed up to 100% occupancy. If it is only grossed up to 95% for the base year, it gives the landlord a built-in profit opportunity regardless of increased costs merely by ensuring the building is more than 95% occupied in subsequent years. Therefore, the grossed up clause should always require estimates based on 100% occupancy.
To read the rest of the article, please click here. |
|
Choyce Peterson achieved a seven-week buildout for Renaissance Capital last month, transforming raw space into a complex command center for the organization with a ticker tape monitoring the latest stock prices on Wall Street, full-wall television screens and integrated buffet facilities.
The turnaround was facilitated by the company's teamwork with its architect and construction manager based on a high level of accountability, cross knowledge of each others' fields and direct access to decision makers at the tenant and landlord companies. The entire team understood how to balance cost, quality and speed based on their long-term relationships and experience with other projects.
To read the full press release, please click here. |
Choyce Peterson
