how is common area factored into a tenants rentable office space?

In Leasing Property - Asked by david n. - Feb 1, 2011
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Answer(s)

Jim T.
Owner/Investor
Abilene, TX

You would use a load factor or common area factor to adjust the usable square feet in order to get the rentable square feet. Let's say that the load factor for a building is 18%. You would then multiply the usable square feet by 1.18 (1+the load factor) to get the rentable square feet. A tenant with 1,000 USF would pay for 1,180 RSF.

Feb 1, 2011
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Rob B.
Chandler, AZ

David....
You received a good answer from Jim. As a further clarification, use your as-built plans for the entire square footage of the building. (Or if no such plans exist you can physically measure your building). Determine from that how much is actual tenant rental space. Deduct this amount from the gross square footage and you will then have your usable square footage. The usable square footage divided by the gross square footage will give you your load factor. If you use Jim's example of an 18% load factor, this is saying that 18% of the building is attributable to corridors, lobbies, stairwells, public restrooms, elevators and utility rooms (and any other nooks and crannies that is not tenant space). To further use Jim's example, let's assume a building has 20,000 square feet. This would mean that 3,600 square feet is common area. It is not unusual for a building to have an 18% load factor. The load factor can often range from a very efficient building with little common area of 10%- to an inefficient building of 22%+ square footage. A question, as a tenant, which building would you want to have your usable square feet in? Good luck David,,,, Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Feb 1, 2011
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thurlow & company - U.
Broker/Agent
San Antonio, TX

I would calculate total number of leasable square feet in your project, first. Than, what is your annual overhead (include maintenance and contingency). Than divide that figure by total square feet. This will give you an annual per square foot overhead. Now take that and multiply by the number of square feet in the space in question. This would give you the tenant's annual fee. Divide by twelve.
Of course local market conditions (competition) will ultimately dictate the actual tenant load.

Feb 2, 2011
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Theodore B.
Broker/Agent
Houston, TX

Using an architect to determine the load factor will be money well spent in addition to being very helpful.

Feb 2, 2011
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Ed B.
Broker/Agent
Denver, CO

Jim & Rob are both right but I'd go one step further and get the building measured and certified by an architect.

Feb 4, 2011
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Pete A.
Broker/Agent
Indianapolis, IN

BOMA has standards that provide for the gross area to be recouped through renting the useable area of the building. I agree that an architect can help you determine your add on factor.

Feb 5, 2011
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