Whether the base year operating expenses are normalized to a full occupancy level (typically 95%). Protects tenant from inflated future CAM charges when occupancy rises.
Also known as: base year normalization, gross up base year, occupancy adjustment base year
By Angel Campa, Founder · Updated March 2026
Without a base year gross-up, a tenant signing a lease in a building with 50% occupancy gets a low base year number. As the building fills up, variable expenses increase, and the tenant pays their share of the increase above the artificially low baseline. This can double the expected expense pass-throughs. Grossing up the base year to 95% occupancy establishes a fair benchmark that reflects normal building operations.
Found in the "Operating Expenses" section near the base year definition. Look for language about "adjusting the Base Year expenses to reflect occupancy of 95%" or "normalizing variable expenses."
Lextract uses a combination of AWS Textract OCR and Claude AI to identify and extract the base year gross-up from your lease PDF. The AI searches for the field name and common aliases like "base year normalization", "gross up base year" across all pages of the document, then assigns a confidence score based on OCR quality and extraction certainty. Fields with lower confidence are flagged for human review.
Lextract automatically checks this field against its 15-rule red flag engine. Issues detected for base year gross-up:
Lease Structure
The categorization of expense sharing.
Pro Rata Share
The tenant's fractional responsibility for total building operating expenses.
Base Year
The foundational year used to calculate operating expense increases in gross leases.
CAM Cap %
The maximum allowable annual increase for controllable operating expenses.
CAM Cap Type
Specifies whether the CAM cap is cumulative and compounding or non-cumulative.
Gross-Up %
The assumed occupancy level used to extrapolate variable operating expenses.
If the building is partially vacant during the base year, actual operating expenses are lower than they would be at full occupancy. Without grossing up, the tenant pays for the increase as the building fills -- even though per-tenant costs have not actually changed. Gross-up normalizes the baseline to prevent this unfair result.
They are related but distinct. A regular gross-up adjusts current-year expenses to 95% occupancy to prevent subsidy of vacant space. A base year gross-up adjusts the base year benchmark to 95% occupancy to establish a fair starting point. Both are needed for full protection.
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