How much of this tenant’s CAM can you actually bill under the cap?

Start from the tenant's controllable CAM in the base year, apply the cap percentage to get each year's limit, and bill the lower of the tenant's actual share and that limit. With a $10,000 base and a 5% cap, year 1's limit is $10,000 × 1.05 = $10,500. Under a year-over-year cap, year 2's limit is whatever you billed in year 1 times 1.05. Under a cumulative, non-compounding cap it is $10,000 × (1 + 0.05 × 2) = $11,000, and under a compounding cap it is $10,000 × 1.05² = $11,025. If the tenant's actual share in year 3 is $12,450 and the limit is $11,550, you bill $11,550 and absorb $900.

A non-cumulative (year-over-year) cap measures each year against the prior year, so room the tenant didn't use is lost and a cheap year lowers the base for every later year. A cumulative cap grows from a fixed base-year amount: the non-compounding kind adds the same dollar step each year (base × (1 + cap × years)), while the compounding kind multiplies (base × (1 + cap) to the power of the year), so unused room carries forward. This calculator measures the year-over-year cap against the prior year's billed amount; some leases measure it against the prior year's actual share, which it does not model. Labels vary from lease to lease, so go by the formula, not the name.

Most caps apply only to controllable expenses: costs the landlord can influence through contracts and management, such as landscaping, janitorial, parking-lot sweeping, routine repairs, and management or administrative fees. Real estate taxes, insurance premiums, utilities, and snow and ice removal are usually carved out as non-controllable and pass through in full, because the assessor, the insurer, the utility, or the weather sets their cost. Some leases also exclude security or capital items amortized into CAM. Enter only the tenant's share of the controllable costs here, and bill the non-controllable costs separately without a cap. The lease's own list of what counts as controllable governs.

A cap on increases limits how fast the tenant's controllable CAM can grow from one year to the next, for example “shall not increase by more than 5% per year.” The dollar amount still rises every year the cap allows. A hard cap, usually written as a fixed dollar amount or a fixed rate per square foot, limits the total the tenant pays regardless of actual costs, so once costs pass it the landlord absorbs everything above it for the rest of the term. This calculator models a percentage cap on increases. For a hard cap, the billable amount is simply the lower of the actual share and the stated figure each year.

It depends on the structure. Under a year-over-year cap, next year's limit is the prior year's billed amount plus one year's increase, so a year in which costs fell, or came in under the limit, permanently lowers the base; you can't bill above the new base plus the cap even if costs rebound. In the worked example, year 2's actual of $11,000 came in under its $11,025 limit, so year 3's limit became $11,000 × 1.05 = $11,550 instead of $11,576. Under a cumulative cap, the limit keeps growing from the fixed base whether or not costs rose, so the unused room carries forward and you can recover more in a later year.

The base is the tenant's controllable CAM for the first full calendar year of the lease, or whichever year the lease names as the base year, after that year's reconciliation. Use the tenant's actual share for that year, not the estimates billed during it, and strip out the non-controllable costs and anything the lease excludes. If the tenant moved in mid-year, many leases annualize the partial year or use the first full year instead, so check the definition. A base set in a vacancy-heavy or unusually cheap first year locks in low limits for the whole term, which is why some landlords gross the base year up to a stated occupancy.

Limit the cap to controllable expenses and list taxes, insurance, utilities, and snow removal as non-controllable. Prefer a cumulative, compounding cap over a year-over-year cap, since it lets you recover unused room after a cheap year. Set the base on a full, stabilized year, or gross it up to a stated occupancy. Make sure the cap resets at a renewal or extension rather than running on from the original base. Avoid caps written as a fixed dollar amount, which become a hard ceiling late in the term. Run this calculator with a realistic cost path before agreeing to a number, so you can see what each wording costs over the term.

It takes the tenant's allocated controllable share each year as given, so it doesn't work that share out from the property's total, the square footage, or the exclusions. It doesn't model non-controllable costs, gross-ups for vacancy, administrative fees, caps stated as a dollar amount, caps that reset at a renewal, or base years that are annualized or grossed up. Use it to see what a cap clause is worth across a term, then carry the capped share into the year-end statement. The CAM reconciliation calculator handles one tenant's full true-up against the estimates they paid, with a simple year-over-year cap.