CAM & pro rata share calculator

How a tenant's share is calculated

In a net lease the tenant pays base rent plus its proportionate share of the building's operating costs. In Canada this is usually called additional rent or TMI (taxes, maintenance and insurance); in the US, triple net (NNN) charges or CAM. The share is normally the tenant's rentable area divided by the building's total rentable area, so a vacant unit's share stays with the landlord.

Leases differ on the details, and the details move the number. Some divide by the occupied area rather than the total, which shifts vacancy onto the tenants. Anchor tenants in a shopping centre may pay a fixed amount or be excluded from the denominator, which raises everyone else's share. Some costs, like a tenant's own utilities or a separately assessed tax, are billed directly instead of pooled. Read the definitions of proportionate share, operating costs and rentable area in the lease before you rely on any estimate.

What an occupancy gross-up does

Some operating costs fall when a building is partly empty: cleaning, utilities in common areas, waste removal, some management time. If the actual costs were simply divided up, the landlord would recover less than the occupied tenants' true share of running a fuller building. A gross-up clause lets the landlord adjust those variable costs to what they would have been at a stated occupancy, often written as 95% or 100% in the lease. Fixed costs such as realty taxes and insurance are not grossed up.

Gross-ups matter most in office leases with a base year, where the tenant pays increases over a base-year amount: without a gross-up, a base year measured while the building was half empty would be artificially low and the tenant's later bills artificially high. Enter the share of CAM you treat as variable; the calculator grosses up only that part.

Admin fees, caps and exclusions

Many leases add an administration or management fee to the recoverable costs, expressed as a percentage. This calculator applies it to CAM only, because many leases exclude taxes and insurance from the fee; if yours applies it to the whole pool, add the taxes and insurance to the CAM figure and leave those lines at zero. Leases may also cap controllable costs, exclude capital items or amortize them over their useful life, and exclude costs such as leasing commissions or the landlord's financing. None of those adjustments are modelled here.

Arithmetic only. This is not an appraisal, a valuation opinion, a lease review, or legal, accounting or tax advice. Sales tax such as GST or HST in Canada may apply to additional rent as it does to base rent.

Showing operating costs in a listing

In a for-lease brochure, show the asking net rent and the estimated additional rent per square foot with the year it applies to, and say whether it includes taxes, insurance and management. In an offering memorandum, buyers check whether the recoveries on the operating statement line up with the expenses and the leases, and whether any tenant pays a fixed amount or is capped. In OfferingStack, the Availability page shows the rent for each unit you list, the Financial Overview page shows the income and expense lines you enter, so recoveries can sit on their own line, and lease abstracts carry each tenant's terms.