How is common area factor calculated into the rent of an office lease?

I've received lease information that mentions common area factor for multiple tenant and single tenant as well as annual rent and expense stop estimates with the a 2017 estimate. Can someone provide me an explanation/formula used to calculate the annual rent? Example uses Multi-tenant CAF 19% Single CAF @ 9% base rent $20 and expense stop @ (base year 2017) 11.50
In Leasing Property - Asked by Mustafa F. - Jul 19, 2017
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Christine S.
Lancaster, PA

In a multi tenant office building, the common area factor is often referred to as a load factor. It means that although you are paying for, say, 5,000 SF of leasable space, with a 19% load factor, 950 square feet or 19% of your leasable space will be attributable to your pro rata share of common area. This includes areas such as lobbies, common rest rooms and hallways, conference rooms or cafeterias outside your space that are shared by tenants. So you are really getting the use of about 4,050 square feet inside your office suite, but actually paying for 5,000, and your leasable space includes parts of these areas you use outside of it. The factor varies considerably from one building to the next. Typically the common areas are measured and the percentage they take out of the building is the percentage or load factor you are paying for. In a single tenant building there should be little or any common area. The expense stop you refer to means that the operating expenses are included in your rent for the first year, which becomes the base year for expenses. However, any INCREASES over the base year are payable by the tenant as "additional rent." Ask to see a copy of the lease to see how this is calculated and billed.

Jul 24, 2017
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