Dental Office Lease: Why Am I Paying for the Entire Building's HVAC?
This question comes up among dental practice owners who look at their CAM reconciliation and see a large HVAC line item that feels out of proportion to their space. Sometimes it is a legitimate reflection of how shared systems are billed. Sometimes it is an overcharge. The distinction depends on three things: how your lease defines the HVAC cost allocation, whether you have dedicated HVAC versus shared systems, and whether the denominator in your pro-rata calculation is correct.
Here's how to work through it.
How shared HVAC is typically billed in CAM
In a multi-tenant medical or professional office building, HVAC costs can flow into CAM in a few ways depending on the building configuration:
Central system, pro-rata allocation. If the building uses a central HVAC plant that serves all tenants, the operating, maintenance, and repair costs for that system are legitimate CAM expenses allocated by pro-rata share. Your share should equal your square footage divided by total leasable square footage. This is standard and generally acceptable.
Dedicated rooftop units per suite. If each tenant has their own dedicated HVAC equipment on the roof, the operating costs for that equipment are typically the tenant's direct responsibility, not a shared CAM item. Costs for maintaining the landlord's common-area HVAC (lobby, corridors, elevators) are still legitimately in CAM, but they should be much smaller.
Hybrid systems. Some buildings have central systems for common areas and dedicated units for tenant spaces. In this configuration, CAM should include only the common-area HVAC costs. Maintenance, repair, or utility costs for dedicated tenant systems should not appear in shared CAM.
If your building has dedicated HVAC per suite and your reconciliation includes a substantial HVAC line item, that is worth examining. You may be paying for systems that benefit other tenants or serve spaces outside your lease.
Why dental offices sometimes face higher HVAC costs
There are legitimate reasons a dental practice might pay more for HVAC than neighboring office tenants:
Extended hours. If your practice runs longer hours than surrounding tenants, and the building's HVAC systems run on demand schedules, some leases include usage-based HVAC billing. If your lease specifically includes an hourly or occupancy-based HVAC adjustment, a higher allocation may be contractually correct.
Specialized ventilation requirements. Dental offices require specific ventilation for nitrous oxide, patient comfort, and infection control. If you installed or requested upgrades to the building's shared ventilation system to accommodate dental use, some of those ongoing costs may be legitimately attributable to your space.
Higher square footage in a smaller building. If you occupy a significant portion of a small medical office building, your pro-rata share will be large simply because your space is proportionally large. This is not an overcharge; it is how the math works.
But here's what most dental practice owners don't realize: none of these legitimate scenarios justify paying for systems you do not benefit from or for the entire building's HVAC when you only occupy a fraction of the space.
The pro-rata denominator problem
This is where overcharges most commonly originate. If the occupancy schedule used to calculate your pro-rata share does not include all tenants in the building, your share gets inflated.
For example: a four-tenant medical office building where one tenant holds a gross lease (paying a flat rent with no CAM obligation) might have their square footage excluded from the pro-rata denominator. That exclusion increases every NNN tenant's pro-rata share.
Ask for the occupancy schedule that shows:
- The total leasable square footage used as the denominator
- Which tenants are included in the CAM pool
- Whether any spaces are excluded and why
If any tenants are excluded from the denominator, check whether your lease permits those exclusions. Most standard NNN leases use total leasable square footage as the denominator, regardless of which tenants have which lease types.
What to look for in the HVAC line item
When you get the full expense ledger, break down the HVAC costs:
- Maintenance and service contracts for the building's central system: legitimate CAM
- Utility costs (electricity for HVAC compressors and air handlers): legitimate CAM if for shared systems
- Equipment replacement or major repairs: check whether this is routine maintenance or a capital expenditure. HVAC equipment replacement is often CapEx and may not belong in CAM
- Costs labeled "HVAC upgrades" or "HVAC improvements": almost certainly CapEx, not operating expense
If you see a large one-year HVAC charge that appears to be equipment replacement, request the invoice and check whether the scope constitutes a capital improvement under your lease's exclusions.
Verifying whether you are paying too much
Request from your landlord:
- The full CAM expense ledger for the year in question
- The occupancy schedule and pro-rata share calculation
- Invoices for HVAC line items over $5,000
- Documentation showing whether your space has dedicated or shared HVAC systems
Send this request in writing and reference your lease's audit rights clause. Your audit window is typically 60 to 180 days from the reconciliation delivery date.
If the documentation shows you are being billed for systems you do not benefit from, or that HVAC equipment replacement costs are being billed as operating expenses, you have a basis for a written dispute.
CAMAudit's free scan includes specific checks for HVAC misallocation and CapEx pass-through in dental and medical office contexts. Upload your lease and reconciliation statement to see whether our detection engine flags any issues in your reconciliation.
Read next: Dental Office CAM Charges | Medical Office CAM Charges | Capital Expenditures in CAM: What Your Lease Allows