Gross Leasable Area Versus Net Rentable Area

Landlords usually quote the square footage of tenant spaces in office buildings based upon the “gross leasable area” of the space. Many tenants hear the square footage of the space, and assume that they are getting that amount of space in their premises. In reality, the gross leasable area of a space generally includes the tenant’s pro rata share of the building’s common areas, elevators, common bathrooms, stairwells, and other portions of the building that the tenant doesn’t actually occupy. The actual square footage of the tenant’s space is called the net rentable area of the space. The gross leasable area usually incorporates a “core factor” of 15-25 percent of more. So, that 5,000 sq. ft. office space that you are looking to lease probably isn’t really 5,000 sq. ft.. It’s more like 4,000, or 4,500, or 4,700 (it depends on the particular building and the amount of non-rentable space that is included in the figures).

I have had office clients do elaborate drawings of how their company was going to fit into a particular sized space. They are often surprised when I inform them that their 5,000 sq. ft. space is not really 5,000 sq. ft.. When you are budgeting for your new office space, be sure to take into account the difference between the gross leasable area of your space and the net rentable area.

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About marylandcommercialleaseadvisor

I am a veteran negotiator that has done hundreds of retail, office and industrial leases throughout the United States. I have been a licensed Maryland attorney since 1985, and a licensed commercial real estate broker dating back to 1991. I have served as an expert witness in commercial real estate matters on multiple occasions, and have been a national instructor on real estate leasing issues, retail investments, and distressed commercial assets and REO's. From 1995-2004, I served as the head leasing attorney for the eastern United States for Glenborough Realty Trust, a $2.5 billion diversified REIT that was traded on the New York Stock Exchange. I offer a full spectrum of expert leasing services to landlords and tenants of all types. I am well trained in site location, and I can find the perfect location for a tenant. I can negotiate the business terms with the best of them, PLUS I am an accomplished leasing attorney that has negotiated against many of the best leasing attorneys in the nation. I have negotiated leases for/with companies such as Lord and Taylor, Circuit City, Starbuck's, Outback Steakhouse, Hometown Buffet, Popeye's, Chipotle, U.S. First National Credit Union, Merrill Lynch, New York Life, Bella Photography, Parsons-Brinckerhoff, Caterpillar, Fed Ex, Clear Channel Communications, and many other noted national and regional companies. I have also worked with scores of local regional tenants. I have also developed and leased out a shopping center, and have been a commercial tenant upon at least three occasions myself. I also spent four years as a commercial construction and permanent lender for a large bank. So, I understand real estate leasing from virtually all sides of the deal. That enables me to negotiate win-win deals for clients of all types. I am available as a broker, attorney, and/or consultant to landlords and tenants alike.
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