Guide To Understanding Basic Terminology In Commercial Real Estate Management

If you have ever stepped into the world of commercial real estate in the USA, you may be well acquainted with real estate terminology. You may know that a space for rent is usually expressed in terms of rentable square feet. However most of us find ourselves at a loss when it comes to understanding real estate terminology and working them out for ourselves. Knowing the difference between usable square feet and rentable square feet can make a lot of difference when trying to evaluate and as certain the best deal available on a commercial real estate lease.

So how do you know what you are paying for, and how do you get the maximum space possible at the best price? One way is to approach the top commercial real estate management companies in the USA. However it never hurts to do a little bit of studying on your own. Here is a handy guide on how to calculate rentable square feet (RSF), usable square feet (USF), and the load factor to help shed some light on these possibly confusing terms so that you can source the best deal possible.

Usable Square Feet.

Usable square feet includes the actual area the tenant will occupy from wall to wall. When a tenant occupies a full-floor, it extends to everything inside the boundaries of the building floor, minus stairwells and elevator shafts. For a partial-floor lease, this includes all office space plus any storage or private restrooms. You must remember that column space is, fairly, included in the calculation of total usable square feet.

Rentable Square Feet.

Rentable square feet includes the usable square feet in addition to a pro-rata share of the building’s shared space. Shared space can be anything that is outside your occupied space and is beneficial or useable such as lobbies, restrooms, hallways, etc. A pro-rata share means that tenants pay for these common areas in proportion to the amount of space they lease in the building. As a tenant in a commercial space, your monthly rent is always calculated based on the RSF.

How to Calculate Load Factor

Another factor you must calculate is the load factor. First, find out how much total floor area a building has. Then, subtract the shared square footage to determine the usable square footage. Then divide the total floor space by the USF to get the load factor.

I am John Daniel, A US based Real Estate Professional and Blogger. With experience in real estate of more than 10 years, the above mentioned article is solely based on my experiences with madison management .