Occupied SF as a denominator inflates your share when neighbors move out. Leasable SF keeps your share stable regardless of vacancy.
Occupied square footage measures only the space currently rented to tenants. When used as the denominator in pro-rata share calculations, it excludes vacant space. This means each occupied tenant's share is larger because the total denominator is smaller.
Leasable square footage measures the total rentable area of the property, including both occupied and vacant spaces. When used as the pro-rata denominator, it produces a smaller share for each tenant because the total base is larger. Costs for vacant space are absorbed by the landlord.
| Dimension | Occupied Square Footage | Leasable Square Footage |
|---|---|---|
| Denominator in pro-rata calculation | Total currently-rented SF | Total rentable SF including vacant |
| Tenant share when building is 70% occupied | Larger share (divided by smaller number) | Smaller share (divided by full building) |
| Stability of share percentage | Fluctuates with occupancy | Fixed unless building size changes |
| Vacancy cost allocation | Shared by occupied tenants | Absorbed by landlord |
| Lease language check | Look for "occupied" or "rented" SF terms | Look for "total leasable" or "gross leasable" area terms |
The choice between occupied and leasable SF as the pro-rata denominator can change your share by 10-30% in buildings with significant vacancy. A tenant in a 70% occupied building using occupied SF pays 43% more per square foot than one using leasable SF. This single variable is one of the largest cost drivers in CAM calculations.
Occupied SF as the denominator is worse for tenants in buildings with high vacancy because they subsidize empty space. It effectively transfers the landlord's vacancy risk to existing tenants. Leasable SF is the tenant-favorable option because the landlord bears the cost of vacant space maintenance.
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