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Updated about 6 years ago on . Most recent reply

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Jason Conroy
  • Property Manager
  • Redondo Beach, CA
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Are CAM allocations adjusted when there is a vacancy?

Jason Conroy
  • Property Manager
  • Redondo Beach, CA
Posted

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?

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Greg Dickerson#2 Land & New Construction Contributor
  • Developer
  • Charlottesville, VA
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Greg Dickerson#2 Land & New Construction Contributor
  • Developer
  • Charlottesville, VA
Replied

@Jason Conroy it all depends on how it is spelled out in the lease. I have never seen charges for vacant units allocated among the other tenants but a landlord could write it in that way. Bottom line is make sure you study your lease very carefully as there are no “rules” when it comes to commercial leases.

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