Understanding Rentable Versus Usable Square Feet in Commercial Real Estate

Both tenants and even real estate professionals misunderstand the measurement of office space square footage for rent purposes. The way to find out the amount of rent in most office leases uses both usable square footage, plus the tenant's proportionate share of common areas in the building.  

Usable Square Feet 

Basically, usable square footage is the amount of space you actually occupy. For smaller tenants, usable square footage is just the area of the demised space inside your office suite with no exclusions for recess entry/exit doors or structural columns. That essentially means that the space is measured as if the columns weren't there. However, restrooms, janitorial closets, elevator lobbies, and public corridors are there and you pay for a portion of them along with the other occupants in the building who use them.  

For full floor or multi floor tenants, usable square footage is everything inside the glass line including restrooms, janitor closets and electrical rooms. Just like small tenants, multi or full floor tenants have to pay for a portion of shared spaces not on their floor such as the main floor lobby.  

The Common Area Factor 

The common area factor is a number which refers to shared spaces on a single floor, and within a whole building.  

The FLOOR COMMON AREA FACTOR refers to tenant common areas on that floor alone, and although the number is different depending on the building, it is usually near 8 percent of the floor for a factor of 1.08.  

The BUILDING COMMON AREA FACTOR refers to common areas for all the tenants in the building, and can range from 6 to 8 percent. Common area factors determine the actual square footage for which a tenant will be paying rent.  

When you're quoted a common area factor by a landlord, it usually includes the sum of the floor common area factor and the building's common area factor. This usually results in a sum of 12 - 20% of the building. 

Rentable Square Feet 

Most simply, this is the area of the enclosed interior space which can be used. So barring, any holes in the floor, if you can stand on it, you can use it and will therefore be charged.  

To calculate rentable square footage for smaller tenants, first multiply the usable square footage by the floor common factor, then multiply that answer by the building common factor.  

A full of multi floor tenant would multiply their floor by the building common factor.  

For more information on commercial real estate in Minot or answers to your questions about real estate, please contact our office at any time.