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The RENT blog gives you the resources and tools you need to make the best decisions regarding your real estate needs.  We cover a broad range of subjects regarding office space, tenant needs and what to look for when investing in property.

RENTABLE SQUARE FEET VS. USEABLE SQUARE FEET

RENTABLE SQUARE FEET VS. USEABLE SQUARE FEET

Commercial office rents are based on rentable square feet, not useable square feet, so it is important for tenants to know the difference.  Useable square feet is the actual amount of space within the tenant’s suite (or floor(s), if the tenant is leasing one or more floors).  Useable square feet refers to the actual space over which the tenant has direct and exclusive control.  Rentable square feet refers to the total amount of space from which the tenant benefits.

Useable Square Feet

Usable square footage includes the tenant’s office suite, storage space, and private restrooms.  It does not include common areas which exist outside of the tenant’s suite, but which may benefit the tenant.  For smaller tenants, useable square footage is the area of demised space inside a tenant’s office suite with no exclusions for structural columns; the space is measured as if the columns were not there.  For larger tenants (full floor or multi-floor), useable square footage is everything inside the glassline, including corridors, restrooms accessible via corridor, janitor closets, and mechanical rooms.

Rentable Square Feet

Rentable square footage is calculated by taking the usable square footage and adding a percentage of the common areas.  Entrance lobbies, communal meeting rooms, public restrooms, kitchettes, and hallways will count toward the sum of rentable square feet.  A tenant should be responsible for its prorata share of the common area space, meaning that larger tenants will pay for more common amenities because they derive more benefit.

Common Area Factor

The common area factor is a useful calculation, derived by dividing rentable square feet by usable square feet.  The common area factor, also known as the load factor or add-on factor, is used to calculate the total number of square feet for which a tenant will pay rent given the usable area.  Tenants should calculate this figure for their alternative locations in a space search.

Implications for Financial Analysis

When evaluating space options, remember the different properties have different common area factors and floor plate dimensions which will impact the space plan and required amount of useable square feet.  When conducting a financial analysis of alternative locations, be sure to use a cost per USEABLE square footage metric to ensure an ‘apples to apples’ comparison.  Do not rely solely on a cost per RENTABLE square footage comparison, as this will not yield an ‘apples to apples’ comparison.

At Golden Group Real Estate, we specialize in tenant representation real estate services for office space users in the Chicago area, helping local business owners find office space and negotiate lease and purchase agreements. We never represent landlords, so we are prepared to negotiate aggressively on behalf of our tenant clients.

For more on Golden Group Real Estate, read about our real estate services.  Let us know if we can help you find office space for rent or buildings for sale.  Call us at (630) 805-2463, email us at troy@goldengroupcre.com, or enter your office space search criteria below.

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