Gross Up of Operating Costs
Certain operating costs are “grossed up” as though the building was full, and are then changed back to the tenant[s] on a proportionate share basis.
For example, the water utility bill might be $5,000 for a particular year in which the building was only 50% occupied. So the Landlord would “gross up” the charge to $10,000.00 and the result would be that $10,000.00 x 50% = $5,000.00 is charged back to the Tenant[s] in the building. This practice ensures that certain “consumable’ operating costs (water, janitorial charges, bulb and ballast replacements, etc.) are paid for by the Tenant[s] who occupy space.