Depending on the size of the tenants lease (square footage and number of floors occupied), the usable square footage may include restrooms, maintenance areas, and elevators across several floors. Rent is quoted in terms of rentable, not usable square footage. If the monthly rental rate per square foot is $2, then the monthly rent is $2,500 per month. There are several standards in how to measure the floors or buildings total rentable area, but in its most simple terms, its the area of a floor as if a single tenant rented the entire floor. An architect or space common areas, restrooms, etc. This space is wall to wall with all interior spaces included. Originally the BOMA standards were primarily used for office properties. The Government Services Administrations(GSA) manages the real estate for the federal government. The rentable area consists of the space occupied or leased by the tenant plus an allocated portion of the areas in the building that are shared with other tenants such as the lobby or corridors. Space can be used differently over time. More commonly, any recessed sections or support columns are considered non-existent when landlords calculate usable square footage. Design & Documentation > Architectural Concepts. Dishonest Behavior in Real Estate | Fraud, Puffing & Misrepresentation. Make no deductions for columns or any structural elements within the measure line. Because the rentable square feet is often higher than the usable for a space, it is imperative that you use the correct measurement when evaluating your budget. Copyright 2023 Archtoolbox. As an Amazon Associate, Archtoolbox earns from qualifying purchases. TheBOMA Standardsprovide two methods of calculating Rentable Area. Net Rentable Area means with respect to any Real Estate, the floor area of any buildings, structures or improvements available (or to be available upon completion) for leasing to tenants determined in accordance with the rent roll for such Real Estate, the manner of such determination to be consistent for all Real Estate unless otherwise approved Rentable Area = Usable Area. Whats the difference between livable, rentable, and usable space?Are you currently enrolled in a pre-license real estate school in the U.S.? flashcard sets. from Usable Square Footage in that Usable Square Footage is the tenants In general, the Dominant Portion method is used to define the Boundary Area. Rentable unit actual area a tenant may rent and on which the landlord bases the rent rentable area typically excludes common areas, elevator shafts, stairways, and HVAC and other system equipment areas may include corridors, meeting rooms, lobbies, restrooms, and a proportionate share of any common areas usable area rooms, etc. We also earn commissions from qualifying purchases at GBES.com. Gross Square feet (outside to outside) Buildable (outside to outside) but can be more of an architectural method Usable (inside to inside of premises) Rentable (usable and common area percentage) tenant who occupies an entire floor of an office building will have a lower R/U This does not mean the tenant will only be allowed to use 10% of the space, but rather that 10% of the common area square footage will be added on to the tenants square footage number in the lease. include any common areas of the building such as public corridors, hallways, The usable square feet will not include spaces like elevator shafts or stairwells, as these are not considered unique to a single tenant. For a partial floor lease, this includes all office space plus any storage areas or private restrooms unique to your suite. Calculating the load factor is relatively simple. She spent 11 years as a sales and marketing executive. Please consult a professional architect, engineer, consultant, or agency for advice about specific projects, buildings, conditions, codes, and/or regulations. The usable square footage in an office refers to the space that will be used exclusively by your company. For additional information on commercial real estate terminology click hereFor a free evaluation of your current terms click here. We make no warranty express or implied as to the accuracy or reliability of information on this website. In both methods, calculating the Rentable Area requires multiplying the total floor area by a ratio that represents the tenant's portion of the floor. The difference between usable, rentable, and gross square feet is subtle but extremely important to understand when negotiating a lease. The pro-rata share has many It may also include exterior covered spaces that are part of the building's occupiable space. Rentable square feet is defined as the usable square feet plus a portion of the buildings, Rentable square feet is used to determine your annual base rent expense. The second option has 10,000 usable square feet and a 15% load factor, which means the rentable square feet for this option would be 11,500. Interior Gross Area is deprecated by BOMA, but still used by the IFMA. a tenant believes they need 3,000 Usable or Buildable Square Feet for their Other codes, including local building codes, may have a different definition. Prior to BOMA 2017 for Office Buildings, Boundary Area was called Interior Gross Area (IGA). The most important difference to understand between usable and rentable square feet is that it is the rentable, not the usable, that will be used to calculate your annual rent expense. It is measured to the inside face of a room's walls. Common spaces are areas usable by all tenants in the building and include, but are not limited to, hallways, lobbies, public restrooms, and fitness facilities. When it comes to Building Common Areas, an example would be an Usable Area is always lower than Rentable Area. This number is market-driven and varies on both a full floor and multi-tenant basis. portion or percentage of the propertys common areas. REBNY also allows a loss factor to be applied to usable areas. This lesson covers the following goals: Describe the. Landlords tend to use one approach or another and there prevalence depends on the market. middle of any interior walls that are adjacent to other spaces, hallways or An error occurred trying to load this video. BOMA standards adhere to ANSI processes. When you are examining an office space in person, you may want to take note of areas like this and subtract them from the usable square feet figure you are given. Common areas serve the needs of the tenants of the building, such as providing ingress and egress for the tenants and their clientele. percentage of the Usable Square Footage they occupy of the building. As mentioned earlier,you should confirm what definition should be used for the specific purpose you are undertaking. In the example, 110SF will be added to useable area to yield a 1,110 SF rentable area. Your office space is more than the square footage you occupy. The gross floor area shall not include shafts with no openings or interior courts. need vs. the final Rentable Square Footage, especially if they are considering Course Summary Pass your Tennessee Real Estate Broker licensing exam with our comprehensive prep course. example, if the Usable Square footage is 3,000 square feet, and the R/U Factor It is used for design studies that analyze heat gain or other sustainability issue that require building volume. You can also download valuable study aids from my website, http://www.GlobalRealEstateSchool.com, Like us on Facebook, https://www.facebook.com/GlobalRealEstateSchool/, Subscribe to our YouTube Channel https://www.youtube.com/c/globalrealestateschool. The only spaces excluded are open areas like pools, playing fields, courts, light wells, parking lots, and unexcavated basements. Date posted: August 27, 2018 Common areas, elevator shafts, stairways, and HVAC and other system equipment areas Rentable areas may include Meeting rooms, corridors, lobbies, restrooms, and a proportionate share of any common areas. Usable Square Footage: Whats the Difference? the total square footage that tenants pay rent on and equals the Usable Square If you have more questions or would like to move forward in the leasing process, Your Guide to the Elements of a Commercial Lease (Terms, Definitions), Understanding & Negotiating Your Lease section of the AQUILA Learning Center, contact our experienced tenant representation team. CGA is a larger measure than Exterior Gross Area since it includes covered, but unenclosed, spaces that are considered to be within the building perimeter. It is important that all local codes and standards are adhered to. Building Area is defined by building codes and is the allowable size of the building based on fire hazard and type of construction. to a space for five to ten years in a lease agreement for a space that is too These methods are discussed below. The key organizations that establish accepted standards used in commercial buildings include: The Building Owners and Management Association (BOMA) is the leading trade organization in the commercial real estate industry. Now, to calculate the rentable square feet for an individual tenant in that building, you take the usable square feet (for example, let's say this tenant has 10,000 usable square feet) and multiply it by the load factor of 1.25. Client Privacy, Confidentiality & Security in Real Estate, General Agent vs. Universal Agent in Real Estate | Overview, Differences & Similarities. step in mastering commercial real estate concepts that can help you maximize There are a number of exceptions included in the BOMA Standards (external circulation, non-vertical walls, unprotected openings, and voids), but those are beyond the scope of this article. The difference between the two methods is in the way the ratio is calculated. The BOMA standards are made available through purchase on their website. The first option has a suite with 10,000 usable square feet and a 20% load factor, meaning the spaces rentable square feet is 12,000. RSF is calculated by multiplying the lease rate per square foot by the listed square footage plus a percentage of all the shared or common areas in the building. 2023 AQUILA Commercial. In Washington D.C. the Greater Washington Commercial Association of Realtors (GWCAR) is an organization the provides guidelines for commercial properties. It also includes space taken up by things like columns or recessed entries. It is important to note that different parties will calculate different areas of the exact same building even if they use the exact same method. Consider this example. small or minor additional R/U Factor which increases the Rentable Square The floor or building rentable area is the total potential area that can be leased. With rentable. 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