An important question when assessing a commercial property is determining the difference between usable and rentable space. Knowing the difference is particularly important when negotiating the lease and the true cost of your rent.
Usable Square Feet (USF)
Usable square footage refers to the square footage the tenant can utilize to conduct their everyday business. This can include office areas, boardrooms, and reception that is exclusive to the tenant’s use. However, determining the USF may be different if the tenant is leasing an entire floor as opposed to leasing a unit or a partial area of the floor. If the tenant is leasing a full floor, the USF extends to incorporate everything inside the boundaries of the floor including the mechanical and electrical rooms.
Rentable Square Feet (RSF)
Rentable square footage is defined as the tenant’s USF plus a portion of the building’s common space. Typical common areas include restrooms, lobbies, hallways, and building amenities. The RSF is calculated using the floor’s gross square footage against the square footage in which the tenant occupies within the building. The percentage is attributed as the additional lease cost applied to the tenant’s base rent.
To simplify, the landlord first needs to determine the load factor of the building.
(Load Factor = Total RSF / Total USF)
Then the Load Factor is multiplied by the tenant’s occupied square footage to determine the lease cost.
(RSF = Tenant’s USF x Load Factor)
Ultimately, the Rentable Square Footage is the figure most essential to your lease agreement. Although, these calculations may not be as straight forward as it seems. There are other defining factors related to your lease and should consider an agent to help you asses the terms.
If you have any questions, our team can help you and your agent determine all the costs involved from leasing to the fit-out cost of your commercial space.