CHAPTER 19 Rent

• Jurisdiction: United States
• Publication year: 2022

CHAPTER 19 Rent¹

Chapter Contents

§ 19.01 Office Lease Rent

§ 19.02 Base Rent

[1] Price Per Square Foot

[a] Rentable vs. Usable Square Feet

[b] Cost Components

[c] Increases

[2] Analyzing Base Rent Components

§ 19.03 Escalations

[1] Net and "Not So Net" Leases

[2] Cost Comparisons Between Buildings

[3] Taxes

[a] Definition

[b] Method of Calculation

[c] Fluctuations

[d] Timing of Payments

[e] Tenant's Proportionate Share

[f] Payment in Lieu of Taxes

[g] Tax Increase Clause

[4] Operating Expenses

[a] Porter's Wage or Penny Wage Formula

[b] Pass Throughs

[i] Definition of "Operating"

[ii] Capital Improvements/Capital Expenditure

[A] Capital Expenditures for Government Mandated and Cost-Saving Improvements

[B] Capital Expenditures for "Safety Purposes"

[C] Capital Expenditures for "Stability of Services"

[iii] Types of Leases

[A] Industrial Triple Net

[B] Full Service Gross

[C] Modified Gross

[c] Insurance Coverage

[d] Exclusions

[e] Costs of Landlord Negligence

[f] Other Operating Expense Issues

[i] Capping Expenses

[ii] Cumulative vs. Compound Formula

[iii] Definition of Capital

[iv] Management Fee vs. Corporate Overhead

[v] Passing on Garage Expenses as Operating Expenses

[vi] Costs Associated with Maintaining Good Tenant Relations

[vii] Management Office Rent

[g] Tenant's Proportionate or Pro Rata Share

[h] "Grossing Up"

[i] In General

[ii] Gross Ups for Operating Costs

[iii] Establishing an Appropriate Occupancy Threshold

[iv] When Tenants Should Insist on Gross Up

[v] Potential for Abuse When Determining and Allocating Gross Up Expenses

[vi] Gross Ups—Schools of Thought Regarding Shifting Costs

[vii] Gross Ups for Realty Taxes

[viii] Gross Ups Relating to Rentable Area

[ix] BOMA Measurement Standards

[A] Office BOMA 1980 vs. BOMA 1996 Measurement Standards

[B] FASB's Upcoming Changes in Financial Accounting Standards and their Potential Impact on Real Estate Leasing Arrangements

[I] The Current Measurement Standard—Capital vs. Operating

[II] Expected Changes and Their Impact

[III] Concluding Comment

[x] Imposing a Cap on Area Gross Ups

[i] Building Occupancy

[j] Calculating the "Gross Up"

[i] Base Year Lease

[ii] Expense Stop Lease

[iii] Stipulated Base Amount Lease

[iv] Office Triple Net Lease

[k] Operating Expense Statements

[4A] Changes to Accounting Reporting

[5] Tenant's Right to Audit

[a] Audit Procedures

[b] The Standstill Agreement

[c] Interpreting the Agreement

[i] Escalations

[ii] Estoppel and Conclusivity Clauses

[d] Various Causes of Action

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