Understanding the Common Area Factor: Rental vs Useable Square Feet

Commercial

When renting commercial space, it makes perfect sense for you to understand certain terms, such as the difference between rentable and usable square footage, to help you get the best deal.  Not knowing how these words differ is often a cause for confusion among potential tenants.

So how will you know that you’re getting the best price for the space you’re planning to lease?

Usable Square Feet

Usable square feet is the area that you will occupy under the terms of your lease.  Simply put, it is the space within the walls of the property you are considering to rent.  Columns and recesses inside the office space are not included; it’s as if they’re not there when you compute for usable square feet.  What is usually considered when measuring the usable square feet amount are all office spaces, storage, and private restrooms. 

It can also include hallways, kitchenettes, reception areas, janitorial closets, and electrical or mechanical rooms, especially if you’re renting the full floor, says Euchar from Karkanja real estate. 

Knowing the usable square feet amount actually helps you determine whether the space you are looking at is enough for all your employees.

Rentable Square Feet

To get your space’s rentable square feet amount, just add the usable square footage and a portion of the floor or building’s common areas—corridors, meeting spaces, restrooms, lobbies, stairways.  It’s any area in the building that you can stand on.  Take note that payment for these common areas will be shared with other tenants using these facilities, and should already be computed as part of your rent.

Other spaces that should be covered when computing for rentable square feet are shared restrooms and hallways; elevator lobbies; janitor closets; and electrical, mechanical, and telephone rooms.

So why should tenants be charged based on rentable square feet?

These common spaces obviously need to be maintained for them to be usable, and landlords need to recover the expenses for the maintenance of these areas.  This is why in calculating the monthly base rent, maintenance expenses—electricity, debt service, insurance, janitorial, and construction and design—are included in a tenant’s share of the common area.

To compute for the rentable square footage amount, follow the formula below:

  •  Usable square footage multiplied by common area factor multiplied by building common factor

The common area factor is the area on the floor where your office is located that is accessible to everyone else renting spaces on that same floor.  The number is dependent on the building, although it is somewhere around 8 percent.

The building common factor, on the other hand, refers to the area common to all building tenants.  It ranges from 6 to 8 percent.

These common areas help you determine how much rent you’re going to pay regarding square footage.  On the average, total common factor for most buildings is anywhere between 12% and 20%.

As a tenant, it is your responsibility to be aware of the difference between usable square and rentable square feet.  It pays to know what you’re getting for the amount you’re paying.

 

 

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