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Base Year & Gross Up Provision
A commercial lease provision adjusting variable operating expenses to reflect 95-100% occupancy to ensure equitable pass-through billings.
A Base Year and Gross Up Provision is a commercial full-service gross lease clause establishing a benchmark year of operational costs and adjusting variable expenses to reflect a standardized building occupancy level (usually 95% to 100%).
Grossing up variable expenses (such as utilities and janitorial services) ensures that tenants in future years only pay for actual cost inflation rather than artificially low costs caused by partial building vacancy in the base year.
Frequently Asked Questions
What does a gross-up provision protect in a commercial full-service gross lease?
A gross-up provision adjusts variable operating expenses (like janitorial and utilities) to reflect what costs would be if the building were 95% to 100% occupied, preventing base-year distortion when occupancy rises.
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