If you’ve been looking into renting an office space or coworking space, you likely have been quoted two different numbers - usable square footage and rentable square footage. But what’s the real difference?
The difference between usable square footage vs rentable is subtle, yet incredibly important when renting a space and negotiating a lease. To help you understand rentable vs usable and how to calculate rentable square footage, we are sharing all our expertise below.
Understanding Rentable vs Usable Office Space
Making sense of rentable vs usable office space is essential when figuring out exactly how much space you’re getting when renting a new office for your business. Additionally, understanding the difference will help you get the best deal on office space, with the knowledge of how much space you’ll be getting as a base.
What’s Usable Square Footage?
Usable square footage in an office refers to how much space a company will be able to occupy. This includes the entire floor space within the walls of the area included in your lease. When deciding if an office is a right size for your requirements, this is the number to consider.
While this measure includes the wall-to-wall office space, it does not incorporate the common area of the building, such as lobbies, storage rooms, or hallways. So, from a tenant's view, the usable square footage is just the boundaries within the unit.
How Are Usable Square Feet Calculated?
So, how are usable square feet calculated?
Usable square footage is the area of your space measured within the exterior walls of your suite. So, if you have a 50-foot by the 100-foot rectangular office, you simply multiply 50 by 100 to find the usable square footage. However, if the shape is more complex, it will take added methods to calculate just what the usable square footage is. This information can be provided by an architect, space planner, or engineer so you understand how much space you’re getting in your lease.
What’s Rentable Square Footage?
So, we know what usable square footage is, but what is rentable square footage?
Rentable square feet have added components beyond the usable square footage, adding into account for a percent of the floor space of all shared areas within the building. This can include everything from stairwells and hallways to communal restrooms, gyms, cafeterias, and lobbies. The idea here is that in a lease agreement, tenants will help pay for the cost of maintaining these shared spaces to find their rentable square feet calculation, adding on a higher price to the usable square footage.
How to Calculate Rentable Square Footage?
Wondering how is rentable square feet calculated? It takes a bit more to navigate than the simple usable square footage calculation.
To find your rentable square feet calculation, you must add your usable square footage with your pro-rata share of the common areas in your building. To do this, you must first know the building’s total rentable area and total usable area. So, imagine the building is 30,000 square feet with 25,000 usable square feet and 5,000 square feet of common area. If your space is 2,500 square feet, you will find by dividing 25,000 by 2,500 that you have 10% of the building. This is your pro-rata share. Then, you will multiply the total common area (5,000) by your pro-rata share of 10%. This is 500 square feet of the common area plus 2,500 usable areas for rentable square footage of 3,000 sq ft.
Why Does Usable Square Footage vs Rentable Square Footage Matter?
We’ve stressed the importance of knowing the meaning of rentable vs usable office space, but why does this really matter to you?
The reason it’s so essential to understand rentable vs usable space is so you know just how much you’re getting when you sign your lease. Some tenants are under the impression they are getting more space, mistaking rentable square footage for usable to assume they have a much larger office space.
Additionally, the rentable square footage has a big impact on the occupancy cost, adding to the final price beyond usable square footage, and is something that can be negotiated during the leasing process.
Consider the Load Factor
There’s one other term that’s important to know when signing an office lease - the load factor.
The pro-rata share, as we know, is calculated by dividing the entire building’s total square footage by the usable square footage in the building, and then multiplying that by the usable square footage the tenant has been allotted. This calculation is also known as the load factor.
Typically, the load factor is multiplied by the usable square footage to reveal the rentable square footage. This is an essential step in determining the tenant’s monthly rent payment and will ensure that everyone understands just how much they will be spending, and getting out of their lease each month.
Some Space Is Not Considered Rentable or Usable
Believe it or not, some space is neither rentable nor usable.
While much of an office building falls within the rentable square feet, some elements, like elevators, some stairwells, parking lots, and areas used for general operation are part of the gross square footage of the building, but not calculated with rentable square feet. These areas will not be funded by tenants.
Usable vs Rentable Square Feet Examples
To better master rentable vs usable square feet, we are sharing a few examples to help with your calculations. Let’s get to calculating!
Office Space #1
The first office space you’re exploring has a 30% load factor.
So, imagine you take the 5,000 usable square feet and multiply it by the load factor of 30%> this will give you an additional 1,500 square feet of space.
This number is what gets accounted for as rentable space, providing you with a total of 6,500 rentable square feet.
To simplify, the calculation is:
- Usable square feet x load factor = additional rental space
- Usable square feet + additional rental space = rentable square feet
Office Space #2
For office option number two, the load factor is 25%.
Similar to last time, we multiply the usable square feet by the load factor (5,000 x 25%), which leaves you with 1,250 square feet of added space.
Now, add the two together, and you have 6,250 rentable square feet in office number two.
Consider Your Dollar
When committing to new office space, always pause and take an extra look at what your usable square footage includes, plus what the common area accounts for.
In the case your business doesn’t need the added amenities of private rooms or fancy lobbies, there are some buildings that will better suit your needs, and save you money in the long run. No matter where you decide to spend your money, you’re best off knowing just where it's going when signing a lease.
Now that you know the difference between usable square footage vs rentable, you can go through the leasing process without major surprises. To begin exploring the best office spaces for your business, contact Next Realty today to learn more.
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