My space has less usable square feet than rentable square feet. Why is the landlord charging me for rentable square feet? This is a common question that I get from first new office tenants. The concept does appear strand at first.
This post is going to help you understand the difference between rentable square feet and usable square feet. It will also explain why the landlords use of rentable square feet is justified.
In the typical multi tenanted office building there are two measurements used to calculate the tenant’s base rental rate. These are usable and rentable square feet. The usable square feet is the actual area within the walls of the tenant’s space. The measurement is made from the center of the sheet rock wall. If the space has glass the calculation is made from the edge of the glass window wall. Once these measurements are taken you have the usable square feet of the space.
However the tenant uses additional square feet beyond the usable square feet in their space. These areas include:
- Building conference room
- Janitorial Closets
- Electrical/Telephone room
- Mechanical rooms
The landlord is paying for the maintenance, cleaning and debt service for these spaces. Charging rent on rentable square feet is used offset these expenses. Typically a calculation is made that will apply a percentage to the usable square feet. This calculation results in what is called the core factor.
Calculating Rentable Square Footage:
- Total Building Square Footage – Usable Square Footage = Common Area
- Common Area/Usable Square Footage = C0re Factor
Once the core factor is calculated it will be multiple against the usable square footage to calculate the tenants rentable square footage. Make sure that a reputable architect is making the calculations. Clearly the numbers could be manipulated but quality landlords will not do this to their tenants.