Understanding the Difference Between Rentable and Usable Square Feet

difference between rentable and usable square feetWhen shopping for office space the listing usually includes the rate for rentable square feet, but there is another important metric as well: the usable square feet. The difference between rentable and usable square feet can be difficult to understand, even for real estate professionals, but hopefully, this article will enlighten you.

Usable Square Feet

Usable square footage is the area that you (and you alone) occupy to do business. Usable square footage includes areas like office space (including the area of any columns), janitors closets, storage rooms, and private bathrooms. Although it is called “usable” square feet, this number can include square footage that you don’t have access to as well such as the buildings mechanical or electrical rooms if they are on your floor.

Rentable Square Feet

The rentable square footage includes all of the usable square footage plus common areas such as lobbies, restrooms, hallways, etc. that are not exclusively for your use but benefit you nonetheless. You pay for rentable square feet pro-rata, which means in proportion to the amount of usable square feet that you lease.

The Load Factor

The load factor is what landlords use to calculate rentable square feet for a listing. The formula for this is the total rentable square feet of the building divided by the total usable square feet of a building.

Say a building has a total square footage of 50,000 with 40,000 square feet of usable space. Dividing 50,000 by 40,000 gives us a load factor of 1.25. If you wanted to lease 5,000 square feet in this building, you would then multiply 5,000 by the load factor (1.25) in order to get the rentable square footage: 6,250.

Why Does This Matter?

So now that you know the difference between rentable and usable square feet, you may be asking yourself why it’s so important. Simply put, without knowing the difference you could end up paying the same amount each month for a building with less usable space.

Just as an example, say you are looking at two spaces: space A and space B. Each space lists at 5,000 rentable square feet. Space A has a load factor of 1.15 and space B a load factor of 1.25. By doing the math, you would find out that space A has:

5,000 rentable square feet / 1.15  = 4,347 usable square feet

while space B only has:

5,000 rentable square feet / 1.25 = 4,000 usable square feet

A difference of almost 400 square feet, for the exact same price. The difference may not be staggering but that few hundred feet could be the difference between having room for a new employee or not.

Please contact us at Ullian Realty today for more information on leasing, buying, or investing in property in the Melbourne/Palm Bay/Rockledge/Cocoa/Titusville, FL area. With our deep understanding of the local area and the nuances of commercial/industrial property listings, including the difference between rentable and usable square feet, we will make sure you get the best deal possible.