Understanding Rentable and Usable Square Footage

 

Each office noted in yellow equates to usable square feet. Common areas include bathrooms, communal eating areas, and hallways.

 

There are a lot of different concepts when it comes to commercial real estate, but few of them are as confusing to both tenants and real estate agents as the way to measure office space for rent. Knowing the difference between rentable and usable square feet can spell the difference between getting a great deal on your office space, or paying more for space you generally don’t use much. However, to make is a little easier to understand the most common rule of thumb in determining the amount of rent to be paid for an office space is usable square footage plus the tenant’s share of common area for the building.  But what do those terms really mean?

Usable Square Footage

Simply put the usable square footage is the actual space your office occupies from wall to wall. It can generally be seen as the private area that tenants have for their own personal use such as furniture and equipment. This measure does not include common areas of the building such as restrooms, stairwells, shared hallways or lobbies. If you are a tenant leasing the entire floor or multiple floors, the restrooms and hallways exclusively serving your floors would be included in usable square feet, instead of considered common areas, since you are the only tenant using it. Simple enough, right?

Common Area Factor

The common area factor refers to the shared space both on a single floor as well as the buildings entirety. These are usually noted as Floor Common Area Factor and Building Common Area Factor. When being quoted by the landlord or leasing agent it typically includes the sum of both the floor and building common area factors. Subject to the design of the office building you can expect the total common area factor in the range of 12 to 20%.

Rentable Square Feet

Rentable square footage is your usable square feet IN ADDITION TO an allocated portion of the building’s common areas. Common area, again is usually considered as anything outside of your office space that is of benefit to you such as lobbies, restrooms, or elevators. For your commercial office space, you will pay a portion of the shared space and in the end your monthly rent is calculated as rentable square footage.

Most leases and landlords follow the Building Owners and Managers Association (BOMA) standards for measuring buildings. Remember, the lease should state what how the area was measured. It may be a good idea to hire an independent professional to verify the usable and rentable square feet when leasing a large space. Errors unfortunately are common and can add up to a lot of money over the course of your office lease.

It is important for tenants to compare rates on different office buildings on the basis of usable space, because this will be the actual space that the tenant will have for their business. Though, it is also important for a tenant who is cautions and conscious about their costs should be sure to understand the rental rate per usable square foot as well as rentable square footage.