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What is the difference
between rentable and usable
square footage?
Rent is quoted in terms of rentable, not usable
square footage. What does this mean? The rentable area of
virtually every office unit includes a large block of square
footage that cannot be used, or even found, but for which
the tenant is nevertheless charged rent.
Rentable square footage
equals the usable square footage plus the tenant’s pro-rata
share of the Building Common Areas, such as the lobby, public
corridors, and restrooms.
Usable square footage
is the area contained within the demising walls of the tenant
space, i.e., the space you occupy.
The percentage difference between the rentable
and usable area is known as the Loss Factor. There are no
exact standards for establishing loss factors in office buildings.
Landlords set their loss factors according to what the market
will bear. It is usually expressed as a percentage, which
can then be applied to the usable square footage to determine
the rentable square footage upon which the tenant will pay
rent.
A building with a high quoted rent, but a lower
loss factor, can actually be less expensive than one with
a low quoted rent, but a higher loss factor.
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