Pro-Rata Share Explained — How CAM & NNN Charges Are Really Calculated

What Is Pro-Rata Share?

Pro-rata share is the percentage of a building’s operating expenses that a tenant is responsible for paying. It is typically based on the tenant’s square footage divided by the total leasable area.

That percentage is then applied to CAM, taxes, insurance, or other NNN expenses — year after year.

How Pro-Rata Share Should Be Calculated

1. Determine your leased square footage
2. Determine the building’s total leasable area
3. Divide tenant space by total leasable space
4. Apply that percentage consistently to allowed expenses only

Sounds simple — but this is where many overcharges begin.

Common Pro-Rata Share Errors

• Inflated total building square footage
• Including vacant or non-leasable space
• Using gross building size instead of leasable area
• Changing the denominator year-to-year
• Applying pro-rata share to non-allowable expenses

Even a 1–2% error can compound into thousands of dollars annually.

Why Tenants Rarely Catch Pro-Rata Errors

• Square footage assumptions go unchecked
• Reconciliation statements don’t show calculations
• Tenants trust landlord-provided numbers
• Audit windows close quickly

Can Pro-Rata Share Be Challenged?

Yes. Most leases allow tenants to dispute incorrect calculations — including square footage errors and improper allocations — but only within a defined audit window.

Once that window closes, incorrect pro-rata percentages may become locked in permanently.