Pro-Rata Share

A tenant’s pro-rata share is the percentage of recoverable expenses it pays. In the standard formulation it is the tenant’s rentable square footage divided by the building’s total rentable square footage.

pro-rata share = tenant RSF / building RSF

A 12,400 square foot suite in a 148,000 square foot building carries a pro-rata share of 8.38%.

Three ways leases express it

1. Pro-rata by area — the standard calculation above, recomputed as the building’s leasable area is defined.
2. Fixed percentage — a negotiated figure stated in the lease, which does not move even if areas are remeasured. Common for anchor tenants and in buildings with unusual configurations.
3. Fixed amount — a flat dollar recovery, sometimes with its own escalation. Technically not a share at all, but it occupies the same slot in the calculation.

Recording which method applies matters, because the three produce materially different results and the choice is rarely revisited once the lease is signed.

The denominator is the contentious part

Whether the denominator is total building area, total leasable area, or total leased area changes every tenant’s share. Using leased rather than leasable area shifts vacancy cost onto sitting tenants, which is exactly what gross-up is designed to handle in a more transparent way.

Leases should state the denominator explicitly. When they do not, it becomes the first thing a tenant auditor asks about.

Multiple pools, multiple shares

A tenant can hold different shares in different recovery pools. A ground-floor retail tenant might carry a full share of site maintenance but no share of elevator or upper-floor HVAC costs. Modeling shares per pool rather than per lease is what makes that possible without side calculations.

Work through the arithmetic in the CAM reconciliation calculator.