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Rentable Square Feet and the Common Area Factor

by Lynn Blakeley

The concept of there being no such thing as a free lunch is alive and well in office leasing. Love that giant lobby in your building and the wide, expansive hallways? How about that spectacular sky atrium?  These are all great building amenities but they are not free amenities.  This is because most office leases employ the concept of "rentable" square footage, which is not the same thing as the square footage you actually end up with in your office space.

In simple terms, rentable square footage means any portion of the building floor plate that you can stand on, including hallways, restrooms, janitor closets, elevator lobbies, and everything else. It also includes building common areas, such as lobbies.  When you rent office space in a building, your rent is calculated (surprise!) based on your rentable square footage, not on the actual square footage that you end up with in your office space (your "usable" space).

As with many things, the devil is in the details.  If you lease an entire building, the math is pretty simple: you will pay rent on the entire rentable area of the building. But on anything less than a full-building lease,  calculations will need to be applied to determine how much rentable square footage should be included in your lease.

Building owners rely on the concept of "Common Area Factor" (CAF) in order to arrive at the rentable square footage to include in your lease.  This is a number based on the amount of shared space  on your specific floor (the "Floor Common Area Factor") and in other portions of the building (the "Building Common Area Factor").  The combined total for these numbers tends to range from 12% to 20% for most office buildings, depending on the design and layout of the building.

The landlord will take the amount of usable space you are leasing and add on the CAF percentage in order to arrive at your rentable square feet (meaning the number of square feet for which you will be paying).  For example, let's say you are renting 10,000 usable square feet in a building that has a CAF of 20%.  The landlord will add 2,000 square feet (20% of 10,000) to the 10,000 square feet and will charge you for 12,000 square feet.

When shopping for new space, the CAF of various buildings must be considered if you wish to make true "apples to apples" comparisons between buildings.  Consider Building A with a CAF of 10% and Building B with a CAF of 20%.  If both landlords are asking $30 per square foot, your effective rate (meaning the amount you are paying for your usable square footage) will be lower in Building A.  For 1000 square feet of usable space, you will pay $33,000 per year in Building A and $36,000 per year in Building B.

Questions about Office Leasing?

In the posts below we address many of the issues that routinely come up in office leasing. Check out the posts or just give us a call to discuss your specific concerns: 210.349.6111.

How Tenant Rep Brokers Get Paid

Types of Commercial Leases

The ABC's of Building Class

It's All about the Base

How much Office Space Do You Need?

Lynn Blakeley represents tenants in office lease transactions. Call Lynn at: