A calculation method that accounts for varying time periods or proportions when computing a tenant's share of expenses. Weighted averages are used when occupancy, square footage, or expense rates change mid-year, ensuring costs are allocated based on actual time or proportion rather than simple arithmetic averages.
In CAM calculations, weighted averages assign proportional importance based on the duration or magnitude of each component. For mid-year occupancy changes, the weighted average pro-rata share equals the sum of (each period's share multiplied by the number of days in that period) divided by total days in the year. This method prevents overcharging tenants who moved in or out partway through the year.
A tenant occupies 5,000 SF for the first nine months and expands to 8,000 SF for the last three months. The landlord bills the full year at the 8,000 SF rate instead of calculating a weighted average of 5,750 SF, resulting in a significant overcharge for the first nine months.
If your space size or lease terms changed mid-year, verify that the reconciliation uses a weighted average rather than the year-end figure. Request the calculation showing the time periods and rates used for each segment.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
