Commercial Leasing – Rentable Versus Usable Square Footage

What is the difference between rentable and usable square feet?

This difference is important to know and understand in the context of negotiating a commercial lease. Usable Square Feet is the actual space contained within the walls of the leased premises. Typically, this is the area that you would visibly identify as the leased space and that the tenant exclusively occupies, known as “Useable” space. The calculation of the usable square footage does not include areas like lobbies, restrooms, stairwells, elevators, shared hallways and other common areas.

In contrast, rentable square footage is the usable square footage + a portion of the building’s common area or shared space. For rentable square footage the commercial landlord assigns a portion of the shared space to the particular tenant’s use. This is usually based on their percentage occupancy of the commercial space as a whole. Accordingly, in the commercial leasing context, the landlord calculates the monthly rent based on the rentable square footage, not the usable square footage.

So, a term known as “Gross-up” is the difference between Useable and Rentable, which commonly ranges between 10% and 20%.

Do you know what the Gross-up is for your lease?

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