What is Rentable Square Feet When Leasing Commercial Real Estate?

What is Rentable Square Feet When Leasing Commercial Real Estate?When leasing commercial real estate rentable square feet equals the actual space that you occupy (aka usable square feet) PLUS your portion of the common areas that all the tenants in your building share (e.g. building lobby, bathrooms, hallways, and other corridors).  It’s what you actually pay rent on.

To help you understand rentable square feet better take the following example:

Let’s say a commercial building measures 150 x 150 feet for a total of 22,500 gross square feet.  And lets assume this is a 4 story building with stairwell and elevator space totaling about 500 sf.  Since a landlord cannot rent out stairwell and elevator space it gets subtracted from the total so now you end up with 22,000 square feet of rentable space.

Now when you add up all the building common areas that all the tenants share such as the main lobby, corridors, hallways, and bathrooms you determine that ALL the common area space equals 20%.  This is referred to a buildings common area factor, load factor, or add-on factor (all mean the same thing).

No matter how many total sf you lease 20% of what you pay rent on is your share of the common areas.  So if you lease 10,000 sf you are actually only occupying 8,000 sf (your USF) but paying rent on 10,000 sf (Your RSF).  If you lease 5,000 rentable sf you are occupying 4,000 sf but paying rent on 5,000 sf.

So the next time you are looking at potential commercial real estate buildings to lease make sure you know for sure whether they are giving you the usable square footage or the rentable square footage.  Knowing this info is important to ensure that you are leasing enough space for your business and staying within your budget.

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