The information you obtain at this site is not, nor is it intended to be, legal advice.  
You should consult an attorney for advice regarding your individual situation.  
Contacting an attorney does not create an attorney-client relationship.  Do not send,
e-mail, or provide confidential information or information you do not wish to be
publicly disseminated until such time as an attorney-client relationship has been
established and requested to do so by an attorney.

Copyright 2009 Law Office of Craig W. Little, P.A.  All rights reserved. You may
reproduce portions of this site or materials available at this site for personal and
non-commercial use.  All copies of portions of this site or materials available at this
site must include this copyright statement.
Web Articles
      Calculating Tenant's Proportionate Share of
Operating Expenses Under a Net Commercial Lease

Calculating Square Footage Attributable to a Tenant

Under a net lease that allocates operational expenses based
upon square footage, before the proportionate share for a
tenant that occupies less than an entire building can be
calculated, the amount of space attributable to such tenant must
be determined.  Unfortunately the calculation of the square
footage that is attributable to a tenant is not always a simple
matter.  

Commercial leases usually recite the amount of square footage
that the tenant will be leasing.  But this recitation may not be
accurate, especially if the project consists of leasable units
which have had their delineating walls moved or adjusted or if
the leased space is irregularly shaped.  Therefore the tenant
may insist on a provision in the lease that allows them to have
the exact area of the leased space recalculated after
possession of the leased space has been delivered to the
tenant.

However the actual calculation of square footage that is
attributable to a tenant may be complicated by numerous lease
terms or provisions; all of which together must be considered in
the calculation of the square footage.

The lease terms and provisions that must be examined first
when considering the question of how much square footage is
attributable to the tenant are the terms and provisions that
define the space the tenant will be leasing.  Such provisions of
the lease may simply reference an identified leased space in
which case the dimensions of the leased space will need to be
measured to calculate the square footage attributable to the
tenant.  Or presumed dimensions of the space may be cited in
the lease so these dimensions will again have to be measured
to confirm the recitations in the lease.  Any areas that are not to
be included in the square footage attributable to the tenant,
such as common areas that may fall within the leased space but
which the tenant will not have exclusive use of such as an
electrical closet, must be calculated and deducted from the
square footage and any areas, or portions thereof, that are to
be allocated to the tenant, such as a portion of a common area
utilized in conjunction with another tenant, must be calculated
and added to the calculation.  And sometimes commercial
leases identify the leased space with a sketch attached to the
lease so the presumed dimensions of the space included in the
sketch must be verified.

The calculation of a tenant’s square footage may be further
complicated by subtle distinctions in the terms used in the
lease.  Different calculations of square footage are derived
under a lease that uses the term “leased” area as opposed to
“leaseable“ or “usable” area.  The term “leased” area generally
refers to the area within the outer boundaries of the space that
is subject to the tenant’s lease.  This can include areas that the
tenant may not actually be able to use such as space consumed
by columns, utility systems serving other leased units, or stairs.  
The terms leaseable area or usable area exclude these areas
that are not exclusively available for use and occupancy by the
tenant.

There are even different standards and guidelines for the
measuring of leased spaces and the different standards and
guidelines will result in different square footage totals.  The
lease often will not state what standard of space measurement
is to be used in the calculation of the square footage
attributable to a tenant.  Numerous associations have set forth
various standards which dictate the manner in which the square
footage of leased space should be calculated including Building
Landlords and Managers Association International (BOMA),
International Facilities Managers Association (IFMA), and the
Real Estate Board of New York (REBNY) to cite just a few.  And
such standards are occasionally revised such as the BOMA
standards.  Each of these standards have different criteria
which affect the calculations of a tenant’s square footage.  For
example some standards direct that a tenant’s square footage
be measured to the center line of a demising wall separating the
leased space from abutting and separate leased space.  Other
standards direct that a tenant’s square footage be measured
from the interior surface of the demising wall separating leased
spaces.  Some standards direct that under certain
circumstances a tenant’s square footage be measured from the
plane of the window frame while other standards, under the
same circumstances, direct that the square footage be
measured from the interior surface of the window.

But while these different schemes for calculating the square
footage occupied by the tenant will yield different determinations
for the amount of square footage, if the same scheme is utilized
uniformly throughout the project then, in regards to calculating a
tenant’s proportionate share of the operational expenses for the
project, there should ultimately be no disproportionate impact
on any one tenant because all of the tenant’s square footage
calculations will be affected equally.  However, if the scheme is
not applied uniformly throughout a development then there
would be disproportionate impacts on certain tenants when
calculating the proportionate share of operational expenses.  
And of course, if the rent that the tenant is to pay is based upon
the square footage leased then the different schemes for
calculating the square footage attributable to the tenant can
greatly impact the rent paid over the life of the lease.

                                      Return to Calculating Tenant's Proportionate Share
Law Office of
Craig W. Little, P.A.