When you lease new commercial space, it is important to understand the confusing space measurements used by commercial landlords and their brokers. Your tenant representative should be able to guide you through the calculations needed to determine exactly what you are getting and what you are going to be paying for. The confusion arises because there are four different measurements used in calculating your space and your rent: the rentable square feet; the useable square feet; the actual square footage; and, finally, the load factor, sometimes called the add-on factor.
Rentable square feet
The rentable square footage is usually the first number you will see or hear about when you are looking for space. It is the number advertised in fliers and brochures, and it is the number you will be told about the space if you, foolishly, call the landlord's agent yourself.
The flier or the broker may tell you, "It's 3,630 square feet, and the price is $2 per square foot." On a monthly basis the rent is $7,260 per month.
However, the space itself is not really 3,630 square feet that you can occupy, and you are rarely told that the quote includes an allocation of the charge for a portion of the common area of the floor and building you occupy. The common area of a floor and building include lobbies, restrooms, stairwells, storages rooms and shared hallways.
Usable square feet
Useable square footage is the space between the four walls of the space. It is wall-to-wall. It is the space that your space planner can use to layout your office for optimum use, and, it is rarely the space that you are actually leasing. Continuing with the example we used above, let us say that you have measured the actual wall-to-wall space and it is 55 feet by 55 feet. That is only 3,025 square feet, not the 3,630 that was originally quoted.
Actual Square feet
The third measurement, the actual square footage, in a multi-tenant building, adds another dimension to your space because you share a wall with other tenants, so half of the wall thicknesses has to be added to part of your space calculation. If the walls in the building are 6 inches thick (for this example), three of those inches would be added to each adjoining wall measurement. In our example of rentable square feet, we used space of 55 square feet to come up with 3,025 square feet, so the rentable square feet you would actually be told would be 55 feet and 3 inches and 55 feet and 3 inches, plus the allocation of the fourth measurement: the load factor.
Load factor
The load factor is a percentage added to the actual square footage to arrive at the rentable square footage. The load factor compensates the landlord for the common areas of the building.
It is important for you to know the load factor of a building because it can vary from a very low, and unusual, 8 percent, to a high of 20 percent or more. The nicer, and larger the common area, the larger (usually) the load factor.
In our ongoing example, if the rentable square footage is 55 feet by 55 feet and we added a 20 percent load factor to come up with the rental square feet of 3,630 at $2 per square foot for a rent of $7,260 per month. If the load factor had only been 8 percent, the rentable square footage would have been 3,267 square feet. At $2 per square foot per month, the monthly rent would be $6,534, for a saving of $8,712 per year! You can see that in evaluating space, it is important to determine the load factor so you can determine whether the common areas in the buildings warrant a difference in that factor.
Leases are complicated documents with significant legal consequences. You should always be represented by an exclusive tenant representative and by qualified legal counsel.
Sterling can be reached at [email protected]
Rentable square feet
The rentable square footage is usually the first number you will see or hear about when you are looking for space. It is the number advertised in fliers and brochures, and it is the number you will be told about the space if you, foolishly, call the landlord's agent yourself.
The flier or the broker may tell you, "It's 3,630 square feet, and the price is $2 per square foot." On a monthly basis the rent is $7,260 per month.
However, the space itself is not really 3,630 square feet that you can occupy, and you are rarely told that the quote includes an allocation of the charge for a portion of the common area of the floor and building you occupy. The common area of a floor and building include lobbies, restrooms, stairwells, storages rooms and shared hallways.
Usable square feet
Useable square footage is the space between the four walls of the space. It is wall-to-wall. It is the space that your space planner can use to layout your office for optimum use, and, it is rarely the space that you are actually leasing. Continuing with the example we used above, let us say that you have measured the actual wall-to-wall space and it is 55 feet by 55 feet. That is only 3,025 square feet, not the 3,630 that was originally quoted.
Actual Square feet
The third measurement, the actual square footage, in a multi-tenant building, adds another dimension to your space because you share a wall with other tenants, so half of the wall thicknesses has to be added to part of your space calculation. If the walls in the building are 6 inches thick (for this example), three of those inches would be added to each adjoining wall measurement. In our example of rentable square feet, we used space of 55 square feet to come up with 3,025 square feet, so the rentable square feet you would actually be told would be 55 feet and 3 inches and 55 feet and 3 inches, plus the allocation of the fourth measurement: the load factor.
Load factor
The load factor is a percentage added to the actual square footage to arrive at the rentable square footage. The load factor compensates the landlord for the common areas of the building.
It is important for you to know the load factor of a building because it can vary from a very low, and unusual, 8 percent, to a high of 20 percent or more. The nicer, and larger the common area, the larger (usually) the load factor.
In our ongoing example, if the rentable square footage is 55 feet by 55 feet and we added a 20 percent load factor to come up with the rental square feet of 3,630 at $2 per square foot for a rent of $7,260 per month. If the load factor had only been 8 percent, the rentable square footage would have been 3,267 square feet. At $2 per square foot per month, the monthly rent would be $6,534, for a saving of $8,712 per year! You can see that in evaluating space, it is important to determine the load factor so you can determine whether the common areas in the buildings warrant a difference in that factor.
Leases are complicated documents with significant legal consequences. You should always be represented by an exclusive tenant representative and by qualified legal counsel.
Sterling can be reached at [email protected]