REDEVELOPMENT OF EXISTING SITES AND BUILDINGS MARK ELLIOT & DAVID KIRK (iii) Parking. Leases may treat parking as common areas or may also Building. By adding square commit to provide a certain ratio of parking spaces (“three parking spaces footage, an owner is reducing per 1,000 rentable square feet of premises”). Adding levels of office a tenant’s share of the space to the top of an office building adds rentable square footage, but Building, which could (without does not add parking spaces, and that action will reduce the building’s other factors being in place), parking ratio. If an owner has committed to provide a certain parking ratio reduce the tenant’s operating for its tenants, that commitment can no longer be met. Under this expenses. However, there scenario, it does not matter if not all the parking is used prior to the will be operating expenses building densification (because of parking float or alternate means of associated with the new transportation); that factor could go to the damages, but not to whether space, so while tenant’s there is a breach of the lease itself. percentage of the building is being reduced, the overall pot (iv) Operating Expense Issues. Operating expense provisions are of operating expenses which among the most heavily negotiated provisions in leases. This arises is being allocated based on because operating expenses mean money to the owner and a tenant; each tenant’s share of the they are the costs to operate and run a building, and one of the two building, is being increased. If parties must pay them. The terms negotiated in the operating expense operating expenses on a per provisions will determine which party will pay them. square foot per annum basis are the same for the new How does building densification impact operating expenses? There are space and the existing space, three areas to consider: then there is no impact on the existing tenants by adding the First, adding square footage changes each tenant’s share of the Building. new space. That, however, is By adding square footage, an owner is reducing a tenant’s share of the unlikely.