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Types of Square Feet in Commercial Real Estate Leasing

Posted on March 31, 2023

When leasing commercial space, it’s important to understand the difference between usable square footage (USF) and rentable square footage (RSF). These two terms are often used interchangeably, but they actually refer to different measurements that can have a significant impact on your lease agreement.

What is Usable Square Footage?

Usable square footage is the space that is exclusively available for the tenant’s use. It is the area that the tenant has complete control over, including any private offices, storage rooms, or bathrooms. This is the space that the tenant will use for their day-to-day operations, and it does not include any shared spaces or common areas.

When calculating usable square footage, you simply measure the area of each room or space that is exclusively available to the tenant. This measurement is used to determine the amount of space the tenant will occupy and is an important factor in determining the rent they will pay.

What is Rentable Square Footage?

Rentable square footage, on the other hand, includes both the usable square footage and a portion of the common areas that are shared among all tenants in the building. This may include hallways, lobbies, restrooms, and other amenities that are used by all tenants. The rentable square footage is the basis for calculating rent and is typically higher than the usable square footage.

To calculate rentable square footage, you add the usable square footage of the tenant’s space to a portion of the shared spaces in the building. This portion is typically referred to as the “load factor” or “common area factor” and is expressed as a percentage. For example, if the load factor is 15%, then the rentable square footage would be 115% of the usable square footage.

Why Does it Matter?

Understanding the difference between usable and rentable square footage is important for several reasons. First, it can help you negotiate a fair lease agreement. If you don’t understand the difference, you may end up paying more rent than you should for the space you’re occupying.

Second, it can impact the way you use your space. If you’re only looking at usable square footage, you may think you have more space than you actually do. When you factor in the shared spaces that are included in the rentable square footage, you may realize that you have less space than you need for your business operations.

Finally, it can impact the way you compare different properties. When looking at potential spaces to lease, it’s important to compare them based on rentable square footage rather than usable square footage. This will give you a more accurate picture of the total cost of occupancy and allow you to make a more informed decision.

In conclusion, usable square footage and rentable square footage are two important measurements to understand when leasing commercial space. Usable square footage is the space that is exclusively available for the tenant’s use, while rentable square footage includes the usable space plus a portion of shared common areas. Knowing the difference between the two can help you negotiate a fair lease agreement, use your space effectively, and make informed comparisons between different properties.

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