Usable vs. Rentable Square Feet

Usable and Rentable Square Feet is really about calculating common areas.

The rate you pay, one way or another, usually includes helping a landlord cover the amount of common area available.

Usable and rentable square feet may come up in an office search and it is very important to know the difference as they impact the rental rate in which you might be looking at and depending on what you are seeking, you might actually want to be paying more. Just looking at a flat rental rate, you may not realize that higher rents may give you more common space and if you want common areas, more bang for the rental buck.

Usable Square Feet

Usable square feet is used to define the total area of a specific tenant. This is the area of the unit itself be it a room or something bigger.  If you seek an entire floor, this incorporates all non-usable areas like electrical rooms, office building needs and hallways. It does not include stairways, elevator shafts, reception desks or a courtyard. 

Rentable Square Feet

Rentable square feet incorporates all usable square feet and a designated portion of the building’s common area/space. This can include areas such as hallways, courtyards, lobbies, entry areas, restrooms and even shared storage. This is calculated by taking the total common square footage area and dividing against square footage of each tenant's usable square feet.

Why this is important

Rentable is the factor that provides the annual base rent expense, thus what you are paying for. So it is important to know if your square footage is including a large amount of shared space as it impacts what is known as the Load Factor, which is a simple equation.

Load Factor (common areas) = Total Rentable SF / Total Usable SF

To use this, if you are looking to rent an 1,000 usable square feet for office for $2,000 (to keep it simple!) and find two options:

• The first has a 20% load factor, which equals 1,200 usable feet. This is actually a $1.67 per rentable square foot.

• The second has a 10% load factor, which equals 1,100 usable feet. This is actually $1.82 per rentable square foot.

So one building might be offering lower rent, but the reason is you will be getting less common areas. This is especially true for small offices and shared spaces as the common area may actually be quite large in comparison and important to you. They can both be meeting areas, lunch rooms as well as places to network and take breaks. If keeping things streamlined and all you need is an office, limited shared spaces can keep the rent down.