Are CAM allocations adjusted when there is a vacancy or does the owner eat the difference?
Say there is a 4 unit property where each unit is the same size.  3 of the 4 units are occupied the entire year and the remaining unit is vacant the entire year.  Total CAM charges are $100,000.  Is the proper allocation of these costs $25,000 per unit since each unit makes up 25% of the gross leasable area and the owner is not able to recoup the 25% from the vacant unit?  This is my guess but I recently saw a prior year allocation from a prior owner that essentially would have charged each of the occupied units $33,333 since they each benefited from 33.33% of the total amount spent on CAMs.  Clearly, this owner was trying to recoup 100% of the amount spent but I believe any sophisticated tenant would not have agreed to pay more than their allocation of the GLA.  I saw no language in the lease that says lessees had to cover unallocated expenses for vacant units.  I believe vacancy costs are covered by ownership but perhaps this isn't common?
[{"id": "eloogx7", "text": "Depends on the rest of the lease language covering recoveries, but I would say a little of both. If say that one unit was dark the entire year, you'd have a case that all cleaning expenses should be allocated between the occupied 3 (assuming you didn't clean that unit). Taxes on the other hand, you may not have a case or as strong of a case to allocate 100% between the three units.\n\nIs there any language related to gross ups?", "replies": [{"id": "eloxbyp", "text": "There is no language on gross ups.  The CAMs are the routine ones like trash pickup, parking lot sweeping, and common area utilities.", "replies": [], "depth": 2}], "depth": 1}, {"id": "elp5emu", "text": "Yes, it depends on the leases.   I am a corporate real estate manager &amp; have dealt with thousands of leases!  In my experience, it is pretty rare for the CAM pro rata share or allocation to be altered due to vacancy. However, regional mall leases are often like that, or at least they were years ago, the last time I saw some.\n\nIMO I would never sign a lease like that, it's the landlord problem to keep the property leased, what motivation do they have to do that if their expenses are covered no matter what?", "replies": [{"id": "elqzz6v", "text": "Agreed!  I've been in the business a while and this is the first time I've seen this.", "replies": [], "depth": 2}], "depth": 1}]