Understanding Usable vs. Rentable Square Footage: What's The Difference? (2024)

Usually, though, you will get your rentable squarefootage from the landlord. Just be careful to make sure that it seems reasonable. (Your Tenant Rep, architect or space planner can help you judge this.)

Load Factors

The difference between your property’s rentable and square feet is the load factor. In most markets, paying for a load factor is a fact of life when leasing space in a building with interior corridors or shared areas.

Once you know the load factor, you know how much extra space you pay for. Reviewing load factors can help you compare different buildings. The calculation is as follows:

Typically, buildings with lavish public areas will have higher load factors, meaning that you pay more rent for space that isn't technically yours. However, design quirks like large elevator lobbies, wide hallways, and oversized bathrooms or storage areas can also inflate the load factor. If you can find two roughly comparable buildings with different load factors, choosing the more efficient one will reduce your occupancy costs.

This is not all bad, though. It truly depends on your needs for this operation. For instance, if it is for a prestigious law firm, they will want a building to reflect that prestige, and it will have a higher Load Factor. In this example, an “A” class building with lavish lobby areas, gyms, and other amenities may have a Load Factor (or Loss Factor) of 25%. That means, in addition to the carpeted areas of your office, you’re paying for an additional 25% in common areas.

If, however, this office space is for a more utilitarian back-office space, you probably want to find a building with something like a 15% Load Factor. For a multi-tenanted floor, this is probably the minimum Load Factor because you have shared hallways, bathrooms, and a lobby area.

Understanding Why Usable vs Rentable Square Feet Matters

Confusing rentable and usable square footage can lead to problems down the line. Tenants who mistakenly think the rentable square footage refers to their office space will find themselves with much less room in their offices. In addition, the rentable square footage is what ultimately impacts your occupancy costs, so you'll want to pay the most attention to this number during the negotiating process.

Rentable and Usable Square Footage Tips

Break Out Your Measuring Tape.

While taking the time to measure an office yourself is time-consuming, it's a good idea to do so. If this is a small office, then perhaps you may feel up to measuring the space. If this is anything above 5,000 square feet, we would recommend having an architect field measure the space.

At the very least, you will (or should be) provided with detailed, scaled floor plans. You can use those to spot check the dimensions shown to what is actually there.

To calculate the usable square footage, you'll want to measure the length and width of each room in the office as well as hallways and then add the numbers together. If your calculation differs greatly from the landlord's, request to measure the space together. Or, as suggested above, for not too big an investment, you can get a skilled space planner or architect to field measure and verify the landlord’s measurement. Nothing beats having unassailable facts in a negotiation.

Get the Details on Rentable Square Footage.

A reputable landlord should be willing to make the equation used to calculate rentable square footage calculation as transparent as possible. It should be in line with the BOMA standard. However, to ensure you get the best deal, it is key to double-check the following:

How was the Percentage Calculated?

Ask for the total square footage numbers and calculate this figure yourself.

Note, if you are a small tenant in a big pond, the landlord may give you some pushback on getting these numbers. That said, your broker, a Tenant Rep, can get them for you. Be careful how you approach the landlord on this. Better yet, have your Rep handle it diplomatically.

Major tenants can also push for audit rights within their lease. Note, that landlords are reluctant to give audit rights on their Op Ex, so while you should ideally get this in your lease, you need to be sensitive to how much the landlord needs and desires your tenancy. Depending on the size of your space and even the size of your company, you may or may not get this.

Audit rights will allow you to look through a landlord’s books to assess how accurately their pro-rate shares and expense pass-throughs are calculated. If you choose to exercise this option, you will likely be the party paying for this audit. However, when negotiating your lease, you could include a provision that would leave your landlord financially responsible for the audit if any inaccuracies are discovered.

How Tenant Reps Find The Optimal Rentable vs Usable Square Feet

When it comes to most office buildings, there’s more than meets the eye when determining what space you pay for. It is inevitable that you’ll be responsible for space outside of your direct suite. However, that doesn’t mean that your landlord’s broker will always be fair about the calculation.

Your landlord has sophisticated representation (the Landlord’s Brokers) who works in the industry every day and has a fiduciary to get them the highest price. Level the playing field by retaining a True Tenant Rep™. A True Tenant Rep™ can be the key to finding you the best site, at the best price and with the best terms for your commercial real estate. Not only this, but they will negotiate the lease terms on your behalf. They can find and leverage alternating load factors with other considerations to create competition amongst landlords, driving up the value of your tenancy.

Learn how the tips and tricks from True Tenant Reps™ that will find you the best office for the best price.

Want to talk to a True Tenant Rep™ yourself? At iOptimize Realty® we have over three decades of market intelligence, equipped to direct you to your most efficient CRE portfolio.

Learn how today!