How to Calculate Square Footage for Commercial Real Estate

Commercial real estate rental rates are not calculated the same way as residential leases.  Residential rental rates are often determined by looking at similar rentals in the area, whereas monthly rent for commercial property is a little more complex and based on several types of square foot measurements.  Most commercial leases charge rent based on “rentable square feet” versus “usable square feet.”  Here are some definitions that might clarify these terms:

  • Usable Square Feet – Square footage of space actually occupied by the tenant
  • Rentable Square Feet – Usable square footage + a percentage of the square footage of the common areas.  Common areas are the parts of the building that all tenants use, such as hallways, elevators, stairwells, and lobbies.  The percentage of square footage of common areas is divided up among tenants on a prorated basis.
  • Gross Square Feet – Total square footage of the entire building.

Thus, when a tenant is paying a rent according to rentable square feet, they are paying a part of the landlord’s expenses for the common areas in addition to their usable square feet.  This practice of adding common area expenses and usable square feet is called the “load factor,” and the load factor typically increases annually at a rate that is different from rent increases for your usable square footage.  This can all be very complicated and confusing, so before you even take a tour of a space, be sure to ask the realtor over the phone about the monthly rates for both usable square feet and rentable square feet.

We can help you figure square footage for your business using our office space calculator.  To find out more about the size and rates of our commercial space for lease in Overland Park, give us a call at 913-685-4100!

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