Leasing Definitions—What Does 'Rentable Square Feet' Mean?

Your lease is probably based on rentable square feet

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"Rentable square feet" is a term that combines "usable square feet" and a portion of common areas available to all tenants, according to BOMA Standards, The difference between usable square feet and rentable square feet is generally between 10 and 15 percent, with rentable square feet reflecting a higher amount in cost than usable square feet.

An Example of Rentable Square Feet

When you lease commercial space in a mall, you get more than just the square footage of your particular store area.

Presumably, the mall includes a parking lot, common seating areas, stairs, and perhaps escalators. Your customers might use all these areas. The mall would also include utility and maintenance areas necessary to keep the premises up and running.

It would not be a very good deal for the management company if you paid for only the square footage of the store—your usable square feet or that which you and your business have an exclusive right to use. Therefore, your rent would most likely be based on the total rentable square feet available to you—that is, the space of your store plus a pro rata share of those common areas.

When you're reviewing a lease, the notation for rentable square feet is not all going to be yours. You'll be sharing some of it with the other tenants and their customers and clients, and you'll pay a portion of the rent for those shared areas as well. The question becomes whether those areas are worth it to you.

Consider what they are and compare it to your client or customer base. If you're operating a gym-type facility, your clients might not make considerable use of that upscale food court right outside your door. Then again, if you operate a salon or a high-end retail store, they just might. Having the food court available and nearby might draw in customers.

How Is Rentable Square Feet Calculated?

Rentable square feet is calculated as usable square feet plus a percentage of the common areas of the building. The common areas are divided among all the tenants based on the percentage of the building's total usable square feet that each tenant occupies.

Let's assume that you have leased 2,000 usable square feet in a 20,000-square-foot building. The common areas of the building comprise 10,000 square feet. Your rentable square feet—what you'd ultimately be paying for—would be your 2,000 square feet plus 1,000 square feet of the common areas, or 10 percent of 10,000 square feet. Your rentable square feet would be 3,000.

Related Terms

  • Usable Square Feet: This is the area you and your business personally occupy. It includes any areas that physically fall outside your storefront but that only you and your customers can make use of, such as private restrooms or storage areas. In some cases, if you occupy the entire floor of the building, your usable square feet might include everything outside your store on that floor, including maintenance areas.
  • Load Factor: Also called a common area or add-on factor, the load factor is based on the square footage of the common areas of the building. The total rentable square footage of the building plus its total usable square footage equals the load factor.

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