CAM reconciliation is the year-end true-up between what tenants paid in estimates and what their share of the building’s operating costs actually came to. Most of the work is deciding, line by line, what each tenant’s share should be.
Updated October 31, 2026, with a worked example, gross-ups, caps and the reconciliation timeline. First published July 15, 2023.
CAM stands for common area maintenance: the cost of running the parts of a property that every tenant shares. Lobbies, corridors, restrooms, elevators, parking lots, landscaping, snow removal, security and janitorial service for common areas all land here. Most commercial leases pass these costs through to tenants, usually alongside real estate taxes and property insurance, which are often handled as separate pools with their own rules.
Because the actual bill isn’t known until the year is over, tenants pay an estimate every month. The landlord sets those estimates from the operating budget, usually in the fall, and sends them out with the following year’s estimate letters. Our CRE budget calendar shows where that falls in the year.
The usual starting point is pro rata share: the tenant’s rentable square feet divided by the building’s total rentable square feet. A tenant leasing 10,000 square feet in a 100,000-square-foot building has a 10% share and pays 10% of recoverable CAM, whether the building is full or half empty.
That last part matters. If five of ten equal suites are vacant, the landlord doesn’t split the whole bill among the five occupied tenants. Each tenant still pays its own 10%, and the landlord pays the share that belongs to the empty space. That happens because each share is measured against the whole building.
Leases can define the denominator differently, and retail leases often do. A shopping center may exclude an anchor tenant from the CAM pool, or divide some costs only among the shops that benefit from them. In office and industrial buildings the share is usually a single number per tenant; in retail it can change whenever suites move in and out of a pool.
Some costs rise and fall with occupancy. Janitorial service, electricity, restroom supplies and management fees all go up as a building fills and down as it empties. Others, like landscaping or the elevator contract, stay about the same either way.
A gross-up clause lets the landlord calculate those variable costs as if the building were more fully occupied, most often 95%. Without it, the landlord would recover less of a variable cost in a year with high vacancy, even though each occupied tenant used the same amount of service. With it, each tenant pays about what it would pay in a full building.
“It’s not underhanded. It is what the lease allows if you have that gross-up adjustment in your lease.”
Kathy Lim, BOMA Power Hour session on CAM reconciliation
The wording matters: most clauses say “as if the building were 95% occupied,” not leased. And not every variable cost should be grossed up the same way. A building with no tenants still runs its chillers, lobby lights and parking lot lights, so electricity is usually grossed up with a vacancy consumption rate rather than a straight proportion. We cover that and the other common gross-up mistakes in where CAM reconciliation errors actually come from.
Take a 100,000-square-foot office building that was 80% occupied for the year. Our tenant leases 10,000 square feet, a 10% share, and its lease has a 95% gross-up clause. The landlord budgeted $1,000,000 of CAM, so the tenant paid estimates of $100,000 over the year, about $8,333 a month.
Actual CAM came to $1,080,000: $680,000 of fixed costs and $400,000 of variable costs. Grossing the variable costs up from 80% to 95% occupancy gives $400,000 ÷ 0.80 × 0.95 = $475,000.
| Line | Amount |
|---|---|
| Fixed CAM costs | $680,000 |
| Variable CAM costs, actual at 80% occupancy | $400,000 |
| Variable CAM costs, grossed up to 95% | $475,000 |
| Recoverable CAM pool ($680,000 + $475,000) | $1,155,000 |
| Tenant’s share at 10% | $115,500 |
| Estimates the tenant paid | $100,000 |
| Balance due from the tenant | $15,500 |
Without the gross-up, the tenant’s share would have been 10% of $1,080,000, or $108,000, and the balance due $8,000. The $7,500 difference is the variable cost the tenant’s space would have generated in a full building. Either way, the vacant floors stay the landlord’s cost. Of the $1,080,000 spent, the occupied tenants together cover $864,000 without the gross-up and $924,000 with it, and the landlord pays the rest.
Notice too that the budget missed by 8%, yet the tenant’s balance due is 15.5% of what it paid. Reconciliation outcomes track occupancy and lease terms as much as spending, which is why a small budget variance can still produce a large true-up.
Four lease terms change the answer after the pool and the share are set.
These are exactly the settings that are easiest to get wrong in a spreadsheet, because they sit on each lease rather than on the building. Our five recovery settings to check before the budget locks walks through each one.
For calendar-year leases, most reconciliation work happens in February and March, and statements typically go to tenants 90 to 120 days after year end, with 120 days the most common requirement. That puts delivery between the end of March and the end of April. The lease sets the actual deadline, and some leases limit a landlord’s right to collect if it is missed.
Tenants then have a review window, also set by the lease. Cushman & Wakefield puts typical audit windows at 30 to 180 days from receipt and notes that a balance is usually due within 30 days, with payment not waiving the right to audit. If a tenant overpaid, the lease decides whether the difference comes back as a refund or a credit against future rent.
A careful spreadsheet can reconcile one building. The trouble starts across a portfolio, where every lease carries its own share, cap method, base year and gross-up, and a missed setting stays hidden until a tenant’s auditor finds it.
Kardin calculates recoveries from the same rent roll and expense schedules as the budget, so the estimates in November and the reconciliation in March come from one set of numbers. Caps, base years, exclusions and five gross-up methods are set once per lease and carried forward, retail charge codes and denominator groups are handled separately from office pools, and a leakage report shows how much of each recoverable expense went unrecovered and why. Read more on our CAM reconciliation page.
What Kardin doesn’t do is the billing. It produces recovery files formatted for Yardi, MRI or Commercial Recoveries that you upload to your accounting system, which stays your system of record. We compare the approaches in CAM software vs. lease accounting.
The annual comparison of what each tenant paid in CAM estimates during the year with its share of the property’s actual recoverable costs, followed by a bill for any shortfall or a credit for any overpayment.
Usually as the tenant’s rentable square feet divided by the building’s total rentable square feet. Leases can change the denominator, and gross-ups, caps, base years and exclusions adjust the amount further.
Yes, in most leases. Because the share is based on the whole building, the share that belongs to vacant space stays with the landlord. A gross-up clause adjusts only the variable costs that depend on occupancy.
A lease provision that calculates occupancy-sensitive costs, such as janitorial and electricity, as if the building were more fully occupied, often 95%, so each occupied tenant pays about what it would in a full building.
The lease sets the deadline. For calendar-year leases, 90 to 120 days after year end is typical, with 120 days the most common, which means the end of March to the end of April.
Usually, within a window the lease defines. Cushman & Wakefield cites 30 to 180 days from receipt as typical, and paying the balance usually does not waive the right to audit.
Kardin has been the purpose-built CRE budgeting and reforecasting platform for 30 years, and recoveries are where that shows. To see a reconciliation built from your own numbers, request a demo.