“Rentable” vs “Usable”

What is the difference between rentable and usable square footage?

Rent is quoted in terms of rentable, not usable square footage. What does this mean? The rentable area of virtually every office unit includes a large block of square footage that cannot be used, or even found, but for which the tenant is nevertheless charged rent.

  • Rentable Square Footage

    Equals the usable square footage plus
    the tenant’s pro-rata share of the Building
    Common Areas, such as the lobby, public
    corridors, and restrooms.

  • Useable Square Footage

    The area contained within the
    demising walls of the tenant
    space, i.e., the space you occupy.

The percentage difference between the rentable and usable area is known as the Loss Factor. There are no exact standards for establishing loss factors in office buildings. Landlords set their loss factors according to what the market will bear. It is usually expressed as a percentage, which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent.

A building with a high quoted rent, but a lower loss factor, can actually be less expensive than one with a low quoted rent, but a higher loss factor.

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