What Is an Anchor Exclusion in a CAM Lease?

An anchor exclusion in a CAM lease removes an anchor tenant's square footage from the denominator used to calculate each tenant's pro-rata share of common area maintenance costs. When an anchor's space is excluded, the remaining tenants' shares are calculated against a smaller denominator, which means each of them pays a larger percentage of the same total CAM pool.

The ICSC (International Council of Shopping Centers) workshop materials make the mechanics explicit: "it would be incorrect to include" a major anchor's GLA in the pro-rata denominator when the anchor pays a fixed or separate CAM amount. Anchor tenants typically negotiate gross deals or fixed CAM contributions, not pro-rata reimbursements. When their square footage stays in the denominator but their payment doesn't reflect full costs, the gap gets passed to smaller tenants. When their space is removed from the denominator, the math simply gets worse for inline tenants more directly.

The Dollar Arithmetic

A concrete example from practitioner analysis (NRTA "CAM Wars" newsletter):

• 100,000 SF shopping center
• 40,000 SF anchor tenant, excluded from denominator, paying $120,000 fixed CAM
• CAM pool: $500,000
• Anchor's proportionate share (if included): 40% × $500,000 = $200,000
• Anchor's actual fixed payment: $120,000
• Shortfall: $80,000

Ten inline tenants collectively occupy 60,000 SF. With the anchor excluded, they divide the full $500,000 among 60,000 SF rather than 100,000 SF.

Your CAM bill increases from $30,000 to $50,000 — a 67% increase — while the anchor's fixed payment stays at $120,000 regardless of actual costs.

The shortfall from the anchor's fixed-rate deal ($80,000 in this example) effectively disappears into the landlord's math. The landlord recovers it from inline tenants via the smaller denominator.

Why anchor exclusions are standard practice

Anchor tenants — department stores, grocery chains, home improvement retailers — have historically had significant negotiating leverage in retail leasing. They draw traffic that benefits the entire shopping center. Their typical deal structure reflects that leverage:

• Fixed CAM contribution (dollars per square foot, not adjustable)
• Separate maintenance obligation for their own parcel or building
• Their own parking, signage, and common area rights

Because anchors maintain their own areas and pay a fixed amount, including their square footage in the pro-rata denominator would require sophisticated accounting to prevent double-counting. ICSC materials treat exclusion as cleaner from an administration perspective.

The problem for inline tenants is that "cleaner administration" and "fair allocation" aren't the same thing. When the anchor's fixed payment understates its actual proportionate cost burden, the difference shifts to inline tenants through the denominator mechanics.

Gregg Ankenman of NRTA describes anchors as paying "a particular deal — one that usually is a gross deal and does not involve payment of CAM." Smaller tenants effectively subsidize any shortfall.

How to identify the anchor exclusion in your lease

Look for the definition of "total leasable area," "total rentable area," or "gross leasable area" in the CAM section. If it includes language like:

• "excluding any area occupied by anchor tenants as designated in Exhibit [X]"
• "excluding any tenant occupying more than [X] square feet"
• "excluding areas maintained by tenants under their own maintenance obligations"

...then the anchor exclusion is present. The denominator does not include anchor space when calculating your pro-rata share.

The dollar consequence depends on how large the excluded space is relative to the total center. In a 100,000 SF center with a 40,000 SF anchor exclusion, your effective denominator is 60% of the total. At 50,000 SF excluded from a 90,000 SF remaining inline area, the math is even more distorted.

What inline tenants can negotiate

The anchor exclusion itself is generally non-negotiable in shopping center leases — landlords need it to administer anchor tenants' fixed-contribution deals. The negotiating leverage is in the protection against the shortfall:

1. Shortfall protection clause

Request language requiring the landlord to absorb any difference between an anchor tenant's fixed CAM payment and its proportionate share:

"In no event shall Tenant's pro-rata share increase as a result of any anchor tenant paying less than its proportionate share of CAM Costs, maintaining its own parcel, or being excluded from the denominator. Any shortfall between an anchor tenant's CAM contribution and its proportionate share shall be borne by Landlord and shall not be reallocated to Tenant or any other inline tenant."

Most landlords will resist this. The realistic outcome is often partial protection — the landlord agrees to a "true-up" mechanism if the anchor's fixed contribution falls below a threshold percentage of its proportionate share.

2. Cap on effective pro-rata share

Request that your maximum pro-rata share be capped regardless of denominator changes:

"Tenant's pro-rata share shall not exceed [X]% of total CAM Costs in any calendar year, regardless of changes to the denominator resulting from anchor tenant exclusions, building expansions, or parcel sales."

3. Transparency on anchor contributions

Request disclosure of anchor tenants' CAM contribution amounts in the annual reconciliation:

"Landlord's annual reconciliation statement shall include the aggregate CAM contributions of all tenants whose square footage is excluded from the denominator, the gross leasable area excluded from the denominator, and the denominator used to calculate Tenant's pro-rata share."

Without this information, inline tenants cannot independently calculate whether the anchor exclusion is affecting their bills, or by how much.

The vacancy compounding problem

Anchor exclusions compound the vacancy problem. If the anchor space is excluded from the denominator and some inline space is also vacant, the effective denominator shrinks further.

Continuing the example:

• 100,000 SF center
• 40,000 SF anchor excluded
• 10,000 SF inline vacancy
• Effective denominator: 50,000 SF

Your 6,000 SF share: 6,000 ÷ 50,000 = 12%. Your CAM bill: $60,000 on a $500,000 pool.

Compared to 6% of the full GLA: $30,000. Your bill is exactly double what it would be in a fully occupied center with anchor space included.

This interaction is why the denominator definition matters as much as the anchor exclusion clause itself. See Pro-Rata Share: GLA vs. GLOA — Which Denominator Protects Tenants? for the language governing how vacancy affects the denominator independently of anchor exclusions.

Anchor exclusion vs. co-tenancy clauses

Anchor exclusions relate to CAM allocation. Co-tenancy clauses are a separate but related provision that addresses what happens to your lease obligations when an anchor closes or the shopping center drops below a specified occupancy threshold.

Where anchor exclusions quietly increase your CAM bills, co-tenancy failures typically trigger explicit remedies: rent reductions, lease termination rights, or conversion to percentage rent. They are separate negotiating tracks, but both address the economic interdependence between anchor tenants and inline tenants in retail shopping centers.

Frequently Asked Questions

Is an anchor exclusion legal?

Yes. Anchor exclusions are standard lease-drafting provisions, not violations of any law. Courts treat them as contractual matters, enforced according to the lease terms. The ABA Real Property Section has noted that lease disputes over "denominator" issues are common but resolved through contract interpretation, not statutory override.

Do office and industrial leases have anchor exclusions?

Rarely, in the same form. Office leases don't use the term "anchor tenant," but they face analogous issues when a major tenant maintains its own areas or pays a fixed contribution. The denominator dispute in office contexts usually involves different questions — whether parking garages count, how shared areas are measured — rather than named tenant exclusions.

What if the anchor tenant closes?

If the anchor closes but their space remains in the denominator, your pro-rata share stays the same. If their space is excluded from the denominator and they close, the denominator doesn't change (absent specific lease language addressing closed anchor space). The co-tenancy clause is the mechanism to address an anchor closure's economic impact on your lease.

Can an anchor exclusion be challenged after the lease is signed?

Generally no — if it's in your lease, it governs your CAM allocation. The time to challenge it is before signing. If the anchor exclusion wasn't in the lease as executed but the landlord is applying one administratively, that's a different situation and potentially challengeable as an unauthorized modification of the billing methodology.

How do I find out what denominator the landlord is actually using?

Request the annual reconciliation statement's supporting workpapers. Most landlords provide a summary showing the total CAM pool, the tenant's square footage, the denominator, and the resulting percentage. If the denominator is significantly less than the building's total GLA, ask for an explanation and verify whether the difference consists of anchor exclusions or vacant space exclusions (GLOA denominator).

Related reading:

• The Commercial Tenant's Guide to CAM Lease Language — complete provision-by-provision guide
• Pro-Rata Share: GLA vs. GLOA — Which Denominator Protects Tenants?
• CAM Exclusions Every Commercial Lease Should Have
• How to Spot Predatory CAM Language Before You Sign