Rentable vs. Usable

What are the differences between rentable and usable square footage?

Rent is quoted in terms of rentable, not usable square footage. What does this mean? The rentable area of virtually every office unit includes a large block of square footage that cannot be used, or even found, but for which the tenant is nevertheless charged rent.

Usable Square Footage

Usable square footage is the area contained within the demising walls of the tenant space, i.e., the space you occupy. (This figure will be slightly different for tenants who lease an entire floor.)

Rentable Square Footage

Rentable Square Footage is the usable square footage plus the tenant’s pro-rata share of the building common areas, such as the lobby, public corridors, and restrooms.

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Loss Factor

The percentage difference between the rentable and usable area is known as the Loss Factor. There are no exact standards for establishing loss factors in office buildings. Landlords set their loss factors according to what the market will bear. It is usually expressed as a percentage, which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent. A building with a high quoted rent, but a lower loss factor, can actually be less expensive than one with a low quoted rent, but a higher loss factor.