 In commercial real estate, Rentable Square Footage (RSF) plays a crucial role in determining the amount of space available for lease within a building or property. Let's break down what RSF means and how it impacts cost of occupancy for office tenants:
Usable Square Feet (USF): USF represents the actual space occupied by a specific tenant. It includes offices, conference rooms, and other areas directly used for business operations. Excluded from USF are common areas shared by all tenants, such as lobbies, restrooms, stairwells, and storage rooms. Rentable Square Feet (RSF): RSF combines the tenant's usable square footage with a portion of the building's shared or common space. Common areas contribute to the overall functionality of the building and include amenities like hallways, elevators, fitness centers, and lobbies. Each tenant pays for these common areas based on their leased space proportion. RSF is calculated as the sum of USF and the pro-rata share of common areas. Load Factor (LF): The load factor accounts for common areas and is expressed as a percentage (typically between 10% and 20%). It adjusts the usable space to account for shared amenities. The formula for calculating rent based on RSF is:
Why Load Factor Matters: Load factor ensures that tenants contribute to the maintenance and use of common spaces. No two buildings have identical common areas, so spaces with the same RSF may differ significantly in usable space. Understanding the load factor helps tenants evaluate the best fit and value for their office space. Surprisingly, load factor information is often missing from marketing materials and industry databases and it’s not uncommon for listing brokers to be uncertain about the building's load factor when showing spaces. In summary, understanding RSF, load factor, and usable space is essential for making informed decisions about office leasing. Comments are closed.
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