Rentable square footage (RSF) in real estate refers to the total amount of space that a tenant is charged for in a commercial lease. This includes not only the tenant’s usable square footage (the actual space they occupy and use exclusively) but also a proportionate share of the building’s common areas. Common areas might include lobbies, hallways, restrooms, stairwells, elevators, and other shared spaces that benefit all tenants within the property.
Key Characteristics of Rentable Square Footage:
Includes Usable Space and Common Areas: Rentable square footage comprises both the usable square footage and a proportionate share of the building’s common areas, such as corridors, lobbies, and shared amenities.
Calculation: The RSF is calculated by adding the tenant’s usable square footage to their share of the building’s common areas, which is determined by a common area factor or load factor. This factor represents the percentage of common areas relative to the total building area.
Basis for Rent: Rent is typically calculated based on the rentable square footage, making it a critical metric for determining the cost of leasing a space.
Load Factor: The load factor, or common area factor, is a key component in calculating RSF. It is the ratio of the building’s total common areas to the total usable space. For example, if a building has a load factor of 1.15, the RSF is 15% larger than the usable square footage.
Transparency and Comparability: Understanding RSF allows tenants to compare different lease options on an apples-to-apples basis, considering both the private and shared space they are paying for.
Benefits and Considerations:
Comprehensive Costing: Rentable square footage provides a more complete picture of the cost of leasing space in a commercial building, as it includes both exclusive and shared areas.
Lease Negotiations: Tenants can use knowledge of RSF to negotiate better lease terms, ensuring they are aware of the full extent of the space they are paying for.
Space Utilization: Understanding RSF helps tenants plan their space utilization effectively, accounting for the shared spaces that they contribute towards maintaining.
Rentable square footage is a vital metric in commercial real estate, reflecting the total leasable area for which a tenant is financially responsible. It encompasses both private, usable spaces and a share of the common areas, providing a comprehensive basis for calculating rent and facilitating transparent lease comparisons.
