REDEVELOPMENT OF EXISTING SITES AND BUILDINGS MARK ELLIOT & DAVID KIRK
To further complicate this for the owner doing a building densification , many leases will exclude any new space added to the building from the operating expense provisions , under a clause that will look something like the following :
Excluded from operating expenses are : … costs associated with any improved space added to the Building after the date of this Lease .
Second , almost any lease would exclude utility and related costs incurred in creating the new space , as an extraordinary expense not related to tenant ’ s use of the building , and thus not reasonable as an inclusion in operating expenses . If this is the case , submetering the contractor ’ s use of utilities would be required , if that was even possible .
Finally , there is the issue of extra wear and tear on the common areas of the building , by virtue of ultimately having more people ( tenants ) using the same amount of common area . Extra wear and tear will cause higher operating expenses . To the extent this extra cost is not offset by more square footage paying into the operating expense pool , then each individual existing tenant ’ s operating costs will increase , as a result of densification . Depending on how operating expenses provisions are negotiated in leases , that may be a problem . plazas ; entrances ; entry drives ) will get more crowded when floors with extra tenancy are added ; common areas do not grow as floors are added .
( vi ) Stress on parking is addressed elsewhere ; with crowding of the main building lobby , outdoor plazas , entrances and entry drives , tenants may not have a legal action under their existing lease , but these actions of adding extra space could have a dramatic impact upon existing tenants ’ willingness to renew their lease . This is the case because common areas are sized on the basis of what the project use and tenant population they are serving are . If you add 10 % more space to your building , you have the effect of increasing the users of your common areas by 10 %. What is the practical impact of those additional users ? The ability to move traffic around on internal roads may be negatively impacted . The ability to exit the project at a signalized exit point may be adversely impacted . Lines may be longer for the use of building amenities .
( v ) Common Area Stays Static . Common areas of the Building ( parking ; main building lobby ; outdoor