What is Gross-Up Clause?
A lease provision requiring landlords to adjust variable operating expenses to reflect what they would have been if the building were at a defined occupancy threshold.
Definition
A gross-up clause requires landlords to adjust variable operating expenses to reflect what they would have been if the building were fully occupied, typically at a defined threshold such as 85%, 90%, or 95%. This prevents tenants in partially occupied buildings from subsidizing vacant space by paying a disproportionate share of variable costs. BOMA 2024 defines the methodology for calculating gross-up adjustments in multi-tenant commercial buildings. The gross-up calculation applies only to variable expenses — fixed costs like property taxes and insurance are excluded. Incorrect gross-up thresholds or applying gross-up to fixed expenses are among the most common CAM billing errors.
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