Mixed-Use CAM split question
We have a tenant that is looking to take the ground floor space of the retail part of a building that has 8 floors of office on top of it. They also want to build into the 2nd floor of the office building that is directly above the space. Their goal is to split the space and SF wise, it will be about half office &amp; half retail. For accounting purposes, the office building has been completely separate than the retail portion.

My question is, what is the best way to allocate CAM for them? It can be a bit confusing because the 2nd floor ties in to the rest of that building when we do our CAM calculations for the building (office) and I don't think we'll be able to get a NNN lease from this.

&amp;#x200B;

Has anyone ever had a deal like this? What was your solution?

Thanks.
[{"id": "emutlzy", "text": "Pro rate their share of the retail space separately?", "replies": [{"id": "emuu3er", "text": "Could you go into a bit more detail? Currently, our retail spaces are individually metered. Did you mean to try and individually meter the entire space and only charge half (estimated split between office/retail sf is 50/50) of what the bill is?", "replies": [], "depth": 2}], "depth": 1}, {"id": "emuytj5", "text": "Could they be treated as two separate leases? One NNN retail and one office. Charge CAM for the office portion of square footage and NNN for the retail portion.", "replies": [{"id": "emv0z4b", "text": "&gt;Could they be treated as two separate leases? One NNN retail and one office. Charge CAM for the office portion of square footage and NNN for the retail portion\n\nGood question. I think it just gets tricky when you consider you're going to be billed for half of what is metered and then re-billing the tenant for the office CAM...", "replies": [{"id": "emv4t1f", "text": "Ideally the retail portion would all be on separate meters. Obviously HVAC isn\u2019t so simple, but CAM is just calculated by square footage anyway, so that\u2019s the easy part.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "emv35aj", "text": "Load Factor?  Standard in my market (Midwest) is 1.13 to 1.15, so if they have 2,500 SF of 2nd floor space, apply 1.13 to the 2,500 square feet and charge them the same rent for the usable, or 2,825 SF.  The load factor adjustment should cover the CAM.  This is typically applied more to office, but it might be worth looking into if you can't separate it out.", "replies": [], "depth": 1}, {"id": "emwb7fd", "text": "Do an industrial gross lease and change a base rent plus utilities on the whole space. Gross up the base rent on the retail portion to account for the lost NNN income.", "replies": [], "depth": 1}, {"id": "emzipjk", "text": "You could deal with the CAM split easy enough, just define each Premises, and then under the additional rent section specify which Premises would get which expenses allocated to it. \n\nEx. \n\n(1) __x__ sqft on the ground floor of the building (\"Retail Premises\") and ___x__ sqft on the 2nd floor of the building (\"Office Premises\").  \n\n(2) (i)additional rent for the Retail Premises is estimated to be ___$__ and shall consist of...\n(ii)additional rent for the Office Premises is estimated to be ___$__and shall consist of....\n \n\nThe real issue you'll run into is that retail and office leases are different in nature. (Ex. Office space likely has shared bathroom, lobby, et  and you'll have to address access to common areas such as that, where as retail is seperated). \nSo you'll either have to do one big lease that combines aspects from both, or do 2 leases. \n\n*sorry for mobile formatting. Edited for typos.", "replies": [{"id": "emziq47", "text": "Hey, somethingcreative99, just a quick heads-up:  \n**seperate** is actually spelled **separate**. You can remember it by **-par- in the middle**.  \nHave a nice day!\n\n^^^^The ^^^^parent ^^^^commenter ^^^^can ^^^^reply ^^^^with ^^^^'delete' ^^^^to ^^^^delete ^^^^this ^^^^comment.", "replies": [{"id": "emziqka", "text": "Hey /u/CommonMisspellingBot, just a quick heads up:  \nYour spelling hints are really shitty because they're all essentially \"remember the fucking spelling of the fucking word\".\n\nAnd your fucking delete function doesn't work. You're useless.\n\nHave a nice day!\n\n[^Save ^your ^breath, ^I'm ^a ^bot.](https://www.reddit.com/user/BooCMB/comments/9vnzpd/faq/)", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]