CAM Gross-Up Explained: Formula, Examples and Pitfalls
A gross-up clause lets the landlord calculate variable operating expenses as if the building were at a target occupancy (commonly 95% or 100%) when it actually was lower.
Formula: grossed-up variable expense = actual variable expense × target occupancy ÷ actual occupancy (only when actual < target).
| Janitorial (actual, 76% occupied) | $40,000 |
|---|---|
| Target occupancy | 95% |
| Grossed-up janitorial | $40,000 × 95 ÷ 76 = $50,000 |
Gross up only what varies
Janitorial, common-area utilities metered with tenant usage, trash, management fees based on collections — yes. Insurance, property taxes, landscaping, snow removal, security patrols — no: they cost the same whether the building is full or empty. Grossing up fixed costs inflates the pool and is a frequent audit finding.
Why it matters for base-year leases
If a tenant's base year was 60% occupied and not grossed up, the base is artificially low and every later year shows a big “increase” as the building fills. Most office leases require the base year to be grossed up the same way.
In CamProof, tick “Variable” on the accounts that vary and set the target in the property settings. The gross-up calculator shows the adjustment on each statement.