What is Rentable Space in Commercial Real Estate Leasing?

Commercial real estate can feel like a maze of terms and measurements. I've noticed that one concept often causes confusion among business owners looking for their next space: rentable space. This measurement impacts everything from your monthly costs to your space planning, so let's clear up any confusion.

Rentable Space: The usable floor area within a building that can be leased to and occupied by tenants, typically measured in square feet. Rentable space excludes common areas like elevators, stairwells, mechanical rooms, and other building infrastructure that cannot be used directly by tenants.

Breaking Down Rentable Space

Think of rentable space as a pizza. The slice you eat is your usable space, but you still pay for the whole pizza, including the box it came in. The components that make up rentable space include:

• Usable square footage: The space you actually occupy

• Common area factor: Your share of shared spaces

• Load factor calculations: The mathematical relationship between usable and rentable space

What's not included? Building elements like:

• Elevator shafts

• Stairwells

• Mechanical rooms

• HVAC systems

• Electrical rooms

Calculating Rentable Space

The Building Owners and Managers Association (BOMA) sets the standards for measuring rentable space. The basic formula looks like this:

Rentable Space = Usable Space × (1 + Common Area Factor)

Different regions might calculate this differently. For example, New York office buildings often have higher load factors than those in suburban areas. This makes sense - more amenities and common areas mean a higher common area factor.

Rentable vs. Usable Space

Here's where things get interesting. Your usable space might be 5,000 square feet, but your rentable space could be 6,000 square feet. That extra 1,000 square feet? That's your slice of the common areas.

This difference affects your costs directly. If rent is $30 per square foot, you'll pay for 6,000 square feet, not 5,000. This is standard practice - you're paying for both your private space and your share of common areas.

Common Misconceptions

I've heard many myths about rentable space over the years. Let's bust them:

• Myth: Rentable space is the same as usable space

• Reality: Rentable space includes common areas; usable space doesn't

• Myth: Common areas don't affect rent

• Reality: You pay for your share of common areas in your rent

• Myth: All buildings use the same calculations

• Reality: Methods can vary by building, region, and owner

Practical Applications

When you're looking at commercial space, consider these practical points:

• Compare load factors between buildings

• Calculate total occupancy costs based on rentable square footage

• Plan your space needs based on usable square footage

• Budget for rent using rentable square footage

Tips for Tenants

Smart tenants should:

• Read lease terms carefully

• Verify all measurements independently

• Compare load factors between properties

• Ask about building measurement standards

Future Trends

Remote work hasn't eliminated the need for office space - it's just changed how we use it. Buildings now offer more collaborative areas and amenities, which might increase common area factors. Some buildings are converting traditional lobby spaces into coworking areas, affecting rentable space calculations.

Conclusion

Understanding rentable space helps you make smart decisions about your commercial real estate needs. Whether you're leasing your first office or relocating to a larger space, these concepts affect your bottom line.

Bellhaven Real Estate's team can guide you through finding and leasing the right commercial space. We'll help you understand the numbers and secure a space that works for your business.