Lease clause guide
How a TMI gross-up works and when it is fair
What is a TMI gross-up clause?
A gross-up restates the variable portion of building operating costs as if the building were fully occupied, so a tenant in a half-empty building pays its share of the cost to serve its own space rather than a share diluted by vacancy.
01In detail
Gross-up exists because pro-rata share is calculated on total leasable area, not occupied area. Without it, in a 60%-occupied building the landlord eats 40% of variable costs; with it, occupied tenants pay the full variable cost per occupied square foot.
The clause is fair when it is limited to genuinely variable costs — cleaning, in-suite utilities, some HVAC — and grossed to a stated occupancy, typically 95% or 100%. It becomes a transfer of landlord risk when fixed costs such as realty taxes, insurance and structural maintenance are grossed up too.
Ask for the gross-up calculation, not the result. The recovery calculator on this site separates fixed from variable cost, applies the occupancy assumption, and shows the uplift in dollars so you can see exactly what the clause is worth to the landlord.
02Questions
Frequently asked
Should realty taxes be grossed up?
No. Taxes do not vary with occupancy, so grossing them up charges occupied tenants for vacant space. Restrict the clause to variable operating costs in the lease wording.
What occupancy level is standard?
95% is the common market position. 100% is landlord-favourable and worth negotiating down.
03Other guides
- Net vs gross lease: what you actually pay
- CAM caps: controllable costs, cumulative vs non-cumulative
- Demolition and relocation clauses: what they cost a tenant
Not advice — Leaselor is a data publisher. We do not broker, arrange, or transact, and nothing here is an offer or professional advice. Figures are indicative benchmarks for comparison and must be confirmed with a licensed professional before you rely on them. About Leaselor