Gross-Up and Operating Cost Provisions in Commercial Lease Agreements: Guidance for Landlords and Tenants

Structuring Terms to Balance Benefits and Mitigate Risks

A live 90-minute premium CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Thursday, March 24, 2022

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

(Alert: Event date has changed from 1/6/2022!)

Early Registration Discount Deadline, Friday, February 25, 2022

or call 1-800-926-7926

This CLE course will focus on the drafting, negotiation, and pitfalls of gross-up and operating cost provisions in commercial leases. The panel will provide an overview of their benefits for landlords and practical guidance for balancing the associated risks for commercial tenants.


Commercial lease agreements often apportion a pro-rata share of the building's operating expenses to tenants. Beyond fixed expenses like insurance and taxes, tenants also share variable costs, such as maintenance, janitorial, and utilities. As expected, these provisions divide costs among tenants based on their share of leased square footage--a relatively straightforward exercise.

Variable expenses, however, fluctuate based on occupancy and from month to month during a tenancy; landlords rely on the concept of "grossing up" the tenant's share as for a fully occupied building.

This practice benefits landlords by shifting some vacant space operating expenses to the building's current tenants. While considered one-sided to the uninitiated, well-drafted gross-up provisions can benefit tenants when operating costs are part of a base-year amount. The tenant is only responsible for its pro rata share of operating expenses that exceed the base year.

Listen as our panel of experienced real estate attorneys provides practical insight into leveraging provisions for additional value to landlords and potentially overlooked protections for commercial tenants.



  1. Defining gross-up
    1. Fixed vs. variable expenses
    2. Interplay with other expense provisions
  2. Landlord perspectives
    1. Goals in drafting
    2. Protections
    3. Avoiding pitfalls
  3. Tenant perspectives
    1. Goals in drafting
    2. Protections
    3. Avoiding pitfalls


The panel will review these and other high priority issues:

  • How can commercial tenants use gross-up provisions to avoid spikes in their pro rata share of operating expenses after the base year?
  • What additional provisions should counsel consider when negotiating and drafting gross-up and operating cost clauses?
  • How can landlords best use gross-up and operating cost provisions in properties slated for or undergoing green renovations?


Bregman, Douglas
Douglas M. Bregman

Bregman Berbert Schwartz & Gilday

Mr. Bregman has maintained a general civil law practice for over 35 years focusing on transactional real estate and...  |  Read More

Carey, Iryna
Iryna Lomaga Carey

Kurzman Eisenberg Corbin & Lever

Ms. Carey’s practice focuses on commercial real estate transactions including: commercial sales and...  |  Read More

Attend on March 24

Early Discount (through 02/25/22)

Cannot Attend March 24?

Early Discount (through 02/25/22)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video