All terms
Pro-Rata Share
A tenant's proportional share of building expenses, calculated as their leased square footage divided by total leasable area.
Definition
Pro-rata share determines what percentage of common expenses each tenant is responsible for in a multi-tenant building. It's calculated by dividing the tenant's leased square footage by the building's total leasable (or rentable) square footage. This percentage is applied to shared expenses like CAM, property taxes, and insurance in NNN and modified gross leases. In small bay properties with many tenants, accurate pro-rata calculations are essential for fair expense allocation.
Formula
Pro-Rata Share = Tenant SF / Total Building SFExample
A tenant leases 3,000 SF in a 60,000 SF building. Their pro-rata share is 3,000 / 60,000 = 5%. They pay 5% of all shared expenses.