March 22, 2016
The difference between usable square feet and rentable square feet can be a point of confusion for commercial real estate tenants. Rental rates for office spaces are generally listed with more square feet than the actual occupied space. It is important for any business owner to know what is included to assure you get the right space at the best price.
Usable Square Feet
Total usable square feet is calculated by the actual areas that the tenant will use for business purposes (oftentimes considered the area inside your doors to the suite). For occupants utilizing just a portion of a property, usable square feet can include all office space, storage space and private spaces like break rooms. For those renting an entire floor or building, usable square feet could also include any areas like janitorial closets or mechanical rooms.
Rentable Square Feet
When renting a commercial office space, tenants will have access to amenities outside of the actual offices. Corridors, lobbies, stairways and common restrooms are all included when factoring the rentable square feet of a property. While usable square feet is the area where the majority of tenants will spend their time, businesses must invest in rentable square feet based on the proportion of space they lease in a building. The increase in the rentable square feet over the usable square feet is referred to as the “load factor” and averages around 15 percent in most commercial office buildings.
Doing the Math
To calculate the usable square feet of an office space versus the rentable square feet, landlords use a common equation known as a load factor. Most leases utilize the standard of measurement from the Building Owners and Managers Association International (BOMA), however, it is important for business owners to be aware of the formula and evaluate options based on the company’s desired outcomes.
To assure your business is pursuing the best option, it is important for any decision maker to be well-informed. Errors are common in this portion of commercial real estate leasing, so be prepared, be informed and don’t be afraid to ask questions – it can save your business time and money.