why pay Do you rent for a space that you do not occupy?
Commercial real estate is surrounded by many concepts that tenants and even real estate professionals do not understand. An example is the measurement of office space for rental purposes. The method used to determine the amount of rent in most office leases includes both usable square footage and the tenant’s proportionate share of the most common areas of the building.
Usable Square Footage
Usable square footage has been used in many areas when it comes to office space. Implying? Well, usable footage is the amount of space you inhabit. For smaller tenants, usable square footage is the area of vacant space within your office without exclusions for entry or exit doors or structural columns. This means that the space is measured as if the columns were not there. However, there are things like janitor closets, bathrooms, elevator lobbies and public hallways and you only pay for the space they occupy with the other tenants using these facilities.
Well, for full-story or multi-story tenants, usable square footage includes everything within the line of glass, including janitor closets, restrooms, and electrical rooms. Therefore, like other tenants, full-floor or multi-story tenants must also pay part of their share of the common space or area in the building.
Tea common area factor
What is this factor? This is a number that refers to the shared spaces on a single floor within a given building. Spaces can pro rata share common areas, such as elevator lobbies and restrooms, or perhaps main building lobbies and amenities used by all tenants in the building.
With that being said, this factor falls into two categories;
· Tea common floor area factor; this refers to the common areas used by the tenant on that floor only. The numbers may vary from building to building, but it is eight percent of the floor factor.
· Tea Building common area factor; refers to the common areas for all tenants of the building. It goes from 6 to 8 percent.
In general, common area factors help determine the actual square footage the tenant must pay in terms of rent. If the landlord or other leasing agent quotes a common area factor, include the sum total of the common area factor of the apartment and the building. This means that the total common factor for most office buildings is between 12% and 20% depending on the building design.
Rental Square feet
A rental square foot is defined as the area of enclosed interior space in a given building excluding holes in the floor, such as stairwells, as well as elevator space and mechanical conduit. Whatever you can afford to stand on, you have to pay for it, as it is a profitable space. This includes janitor closets, restrooms, electrical and telephone rooms, just to name a few.
To calculate rentable square footage, let’s say a particular tenant, all you have to do is multiply the usable square footage by the common factor of the floor, and then multiply the result by the common factor of the building.
The following formula can determine the Rentable vs. Useful Square Feet;
Rsf = usf x (1+% additional)
Additional % = (Leasable Square Feet/Usable Square Feet-1)
Comparison of Various Buildings
When evaluating space options, it is important to remember that most buildings have different common area factors, as well as the dimensions or shape of the floor plate. These factors can have a greater impact on the space plan and the amount of usable square footage needed. When comparing multiple buildings from things like finances, it’s crucial to use a cost per usable square foot (USF) metric to ensure your options are weighed perfectly.
Of course, you need the right space that fits your budget and workplace criteria. But, two buildings with the same expensive rental rate have different economics due to common area factors and space layout issues.
For this reason, it is good to work with a good tenant representation expert who clearly understands all the details of leasing office space. You must have good technical skills to evaluate various options in order to reach a conclusive decision.