• May 16, 2017



O 800 450 Leasing REality | Commercial Real Estate Education

Occupancy Rate: The percentage of space in a building that is occupied in relation to all leasable space in such building.

Operating Expense Escalation (Clause) | Operating Cost Escalation | Operating Expense(s): A provision within a lease which provides that as the building operating expenses increase above what they were in the base year of  lease, the tenant agrees to pay its pro rata share of those increased expenses. Fortunately for landlords, a well-crafted operating expense definition within a commercial lease is quite broad, and consequently, the definition includes a number of expense items ordinarily considered to (1) be of a capital nature and/or (2) contain built in profit components for the landlord. From a tenant’s perspective, suffice to say that when negotiating the operating expense clause, many tenant advocates will take a fine sharpened  “surgical machete” to the operating expense definition.

Outdoor Seating Provision: Provision in a lease regulating the outdoor seating of the tenant. It may require the tenant to obtain permits or licenses from the local municipality and adhere to any specific laws/regulations set forth by any regulating authority. It also may stipulate when and how the area may be used for seating.

Outside Date Language: A provision granting the tenant a rent abatement and/or the option to terminate the lease if the landlord does not deliver the space to the tenant as required under the lease by a set date. If a landlord is willing to provide such language, it must protect itself by adding that such rights shall be subject to force majeure and tenant delay.