In terms of commercial office space, size counts. After all, you don’t want to have a lot of vacant floor space. However, you still want to ensure that your team has enough space to move comfortably during their workdays. Additionally, the size will affect the monthly rent payment. It’s critical to recognize that your lease will include both usable and rentable square footage when calculating the cost of occupying a specific medical office space. To compare different offices and negotiate a fair contract, it is essential to understand what these terms mean.
What is Usable Area Or Usable Square Footage?
The office’s usable square footage will reveal how much room your business will need to occupy. The entire floor area is included within the walls of your renting space. You must consider this figure when determining if a given workplace is the right size for your requirements.
How To Measure Usable Square Footage?
The whole area of your space, determined within your unit’s demising external walls, is your usable square footage. If your area is rectangular and measures 50 feet by 80 feet, you would multiply 50 feet by 80 feet to get 4,000 usable square feet. If the shape you’re working with is more complicated, you can utilize the techniques you learned in geography. Alternatively, you can rely on an architect, engineer, or space planner’s measurements.
What is Rentable Area Or Rentable Square Footage?
A portion of the floor space devoted to all communal amenities in the building is added to the usable square footage of an office to determine its rentable square footage. This assessment may consider stairwells, public restrooms, corridors, lobbies, cafeterias, gyms, and on-site property management offices. The rentable square footage, not the usable square footage, is used to determine your rent because lease agreements compel tenants to contribute to the expense of maintaining communal areas.
How To Measure Rentable Square Footage?
Your usable square footage plus your proportionate share of the building’s communal areas equals your rentable square footage. To calculate the building’s usable area and total rentable area, you must know it. Imagine a structure that is 50,000 square feet in size, of which 42,000 are functional and 8,000 are used for communal spaces. You would calculate your pro-rata share by dividing 42,000 by 4,200 to discover that you own 10% of the building if you have a 4,200-square-foot usable space. Your proportionate share is that. The total common space (8,000 SF) is multiplied by your proportionate share (10%). This allocates 800 square feet of the common area as your portion. You have a total rentable square footage of 5,000 SF when you add the 800 SF of the joint space and the 4,200 SF of the usable area.
Why It’s Important
Usable and rentable square feet have different meanings depending on how they are calculated. The rentable square feet will be used to determine your annual rent expense. Using the correct dimensions when evaluating a budget is critical because space might be more profitable than necessary due to its square footage.
Load Factor
A load factor is a valuable tool that renters and landlords use to determine the difference between a facility’s rentable and usable square feet. This figure has been calculated based on the proportion of communal space in the building. The building’s total rentable square footage is divided by its total usable square footage to determine the load factor.
Load factor = total rentable square footage / total usable square footage
The rentable square footage for the space is then calculated by multiplying this load factor by the tenant’s usable square footage.
Rentable square footage = tenants’ usable square footage x load factor
A renter compares two office locations with different load factors but the same amount of usable square footage and the same leasing price. With a 20 percent load factor and a 10,000 usable square feet suite, the first choice offers a space with 12,000 rentable square feet. The rentable square footage for the second choice would be 11,500 because it has a 15 percent load factor and 10,000 usable square feet. Know more about load factor in commercial leasing?
Example 1:
- 10,000 usable feet x 20% = 2,000
- 2,000 + 10,000 = 12,000 rentable sq. ft.
Example 2:
- 10,000 usable feet x 15% = 1,500
- 1,500 + 10,000 = 11,500 rentable sq. ft.
The tenant’s base rent in the first building would be based on 12,000 square feet, while the rent in the second building would be based on 11,500 square feet. The second alternative with the lower load factor would cost less per month for the same amount of usable space, saving the business money. However, because there are fewer common areas in the building due to the decreased load factor, paying a higher rent may be necessary if more common areas are wanted.
Conclusion
The space you lease isn’t the space you pay for in most medical office buildings. Your lease is based on your rentable square footage, even though you occupy your usable square footage. Your overall bill could be up by between 10% and 30%. While these costs are unavoidable, knowing them can help you set a reasonable budget. In addition, you can consider a building that was constructed more effectively to lessen its impact.
