When assessing a commercial property, an important question 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 (USF) refers to the square footage the tenant can utilize to conduct their everyday business. USF 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 instead of leasing a unit or a partial area of the floor. If the tenant leases an entire floor, the USF extends to incorporate everything inside the floor’s boundaries, 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 building’s tenant occupies. The percentage is attributed to 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 many other defining factors are related to your lease, you should consider an agent to help you assess the term. A leasing agent can help you determine all the costs involved, from leasing to the fit-out cost of your commercial space.
For questions, our design team is also more than happy to help. Contact us.
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