Landlords sometimes pass vacant-suite TI costs and leasing commissions through CAM. Learn the benefit test, how to identify these charges, and how to dispute them.
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Find My OverchargesSee a sample report firstYou are paying CAM every month. Part of what you are paying for should make your tenancy better. Improvements to a vacant suite down the hall do not do that.
Tenant improvement (TI) costs and leasing commissions for vacant spaces are among the most aggressive inclusions some landlords attempt in CAM reconciliations. When CAMAudit reviews reconciliation statements, this pattern appears most often in properties with high vacancy rates, where landlords face pressure to push leasing costs somewhere that looks like ordinary operating expense.
This article explains why vacant suite costs fail the benefit test, what to look for in your reconciliation, and how to document a dispute.
Every CAM charge must pass a fundamental test: does this expense benefit the tenants who are paying for it?
Tenant improvements to a vacant suite serve one party: the incoming tenant. The improvements exist to attract and accommodate that specific new occupant. Existing tenants receive no benefit from new flooring installed in a suite they cannot access and will never use.
Leasing commissions are even more clearly excludable. A leasing commission pays a broker to find a new tenant. That is a direct cost of the landlord's ownership and management activity, not an expense of maintaining the common areas.
Many leases explicitly exclude both categories:
"CAM shall not include any costs incurred in connection with the leasing of space in the Building, including, without limitation, tenant improvement allowances, brokerage commissions, and legal fees related to lease negotiations."
If your lease does not have that explicit language, the benefit test and the general principle that CAM covers common area operating expenses still applies. A vacant suite is not a common area.
Most landlords do not label these costs "tenant improvements." They show up disguised as:
Some landlords fold TI costs into a capital expenditure amortization pool. They spend $120,000 improving a vacant suite, capitalize it, and then amortize it over 10 years as a CAM expense. This passes the capital cost through to existing tenants over time while calling it something other than "tenant improvements."
Building: 100,000 sq ft. Your space: 8,000 sq ft. Pro-rata share: 8%.
Landlord spends $180,000 improving a vacant 5,000 sq ft suite to attract a new anchor tenant. The cost is included in "property improvements" in the CAM pool.
Your share: $180,000 x 8% = $14,400 in your reconciliation year.
Over a 5-year lease (if amortized at $18,000/year), you pay $1,440/year or $7,200 total for improvements to a space you never benefit from.
Even where your lease is silent on the exclusion of TI costs, you can argue direct attribution. If an expense is directly attributable to a single tenant's suite, it should not be in the common-area pool at all. It is a cost that should be billed directly to that tenant or absorbed by the landlord.
Courts have applied this principle in cases where landlords tried to allocate single-tenant costs across the building population. The argument is not complicated: show that the expense serves only one space, that you have no access to or benefit from that space, and that including it in the pool violates the basic purpose of CAM.
No. Gross-up provisions address operating expenses that scale with occupancy, like utilities and cleaning services. The gross-up means: if the building were fully occupied, what would those variable costs be? It does not authorize the inclusion of TI costs or leasing commissions, which are not variable operating expenses. They are one-time capital or transactional costs.
That is a different question. Building-wide capital improvements that benefit all tenants have a stronger argument for CAM inclusion, subject to your lease's capital expenditure rules. The dispute applies specifically to improvements installed inside a single tenant's private suite that have no common-area benefit.
A reduction in your pro-rata share when a new tenant moves in is a separate, mathematical adjustment. It does not convert the new tenant's TI costs into an expense you should share. You cannot be charged for the cost of generating the benefit that reduces your share.
Yes. The absence of an explicit exclusion does not mean inclusion is automatic. You can argue the benefit test, direct attribution, and the general principle that CAM covers common area operating costs. The landlord still must show these expenses are proper CAM inclusions under the terms of your lease.
In buildings with high vacancy, TI amortization can add 5% to 15% to the stated CAM pool. On a $500,000 pool, that is $25,000 to $75,000 in potentially challengeable expenses. At a 10% pro-rata share, you are disputing $2,500 to $7,500 annually.
CAMAudit's detection engine flags improvement line items and cross-references them against occupancy data to identify costs potentially attributable to vacant suites.
See also: Excluded Services in CAM Charges, which covers the full range of non-includable expense categories.
Related: Security Costs in CAM Charges | CAM Exclusions in Commercial Leases