Recovery Ratio Calculator

Recovery ratio measures how much recoverable operating expense actually gets billed back to tenants. Fully-occupied NNN = 100%. Most buildings fall short due to vacancy, base-year carve-outs, admin caps, and reconciliation errors. This calculator quantifies the leak and shows the maximum achievable given current occupancy.

Recoverable expenses (year)

Actually recovered from tenants

Building rentable SF

Currently occupied SF

Expense recovery ratio

75.00%

Max recoverable at current occupancy

80.00%

Recovery gap (vs max)

5.00%

Annual dollar leakage

$24,000

Physical occupancy

80.00%

How the math works

Recovery ratio = dollars collected from tenants ÷ recoverable operating expenses. A fully-occupied building with true NNN leases recovers 100%. Gaps come from vacancy, base-year leases, expense stops, admin fee caps, and negotiation errors in reconciliation.

Most commercial buildings target 85-95% recovery after accounting for vacancy. Anything below 80% is a sign of expense allocation issues or aggressive base-year negotiations that should be tightened at renewal.

How to Use

Enter total recoverable expenses for the period.
Enter actual dollars recovered from tenants.
Enter building rentable and occupied SF.
Read recovery ratio, max at current occupancy, and dollar leak.

Frequently Asked Questions

Why not 100% recovery?

Vacancy (landlord eats opex on empty SF), base-year stops (landlord pays below base), admin fee caps, and disputed reconciliation line items. Most buildings show 85-95% recovery on a stabilized basis.

How to improve recovery?

Push for gross-up on partial occupancy, minimize base-year carve-outs, and audit CAM reconciliation against lease definitions each year. Also worth converting mixed gross/base-year leases to NNN at renewal.

Does recovery ratio affect value?

Yes. Low recovery = landlord subsidizing opex = lower effective NOI. Appraisers adjust for sub-100% recovery when market-rate comparing. Buyers will discount for poor recovery history.