Not All Square Feet Are Created Equal

I thought it would be a good idea to add a reference section with some leasing fundamentals to my website. And with KensTrends, I to try to do it in an entertaining way  – all while showing off my new backyard “studio.” So here is the first in a new series on office leasing concepts: “Not All Square Feet are Created Equal.”

You’re probably wondering what the picture below has to do with commercial real estate. Well, it has everything to do with commercial real estate. The tile is exactly one square foot. I’m in the business of leasing and selling square feet. But when you lease a square foot of office space, the red piece is what you generally get – about 15 to 20 percent less. 

Office Space Leasing Usable and Rentable

What does this have to do with  real  estate?  Click for the video.

When I first meet with a prospective tenant, will we discuss total square footage required and ideal layout. For instance, I recently worked with a health insurance agency looking for 3,000 square feet with 3 offices, a break room, a conference room and an open space  for 8-10 cubicles. That sounds reasonable, and I wound up leasing them 2,928 square feet. But in reality, their space was only 2,499 “usable” square feet. Was the Landlord cheating the tenant? No, this was a multi-tenant building with a lobby, common area restrooms, elevators and corridors. It is perfectly acceptable for the Landlord to apply an “add-on factor” to account for the tenant’s share of those common areas which comprise 17.2 percent of the building.

Most traditional office buildings apply add-on factors of 15 to 20 percent. There are strict guidelines established by BOMA, the building owners and managers association, and most owners will follow these guidelines. But tenants should know that when they lease 1,000 “rentable” square feet they are only getting from 830 to 870 “usable” square feet.

But in some cases, such as single-story offices or buildings with exterior corridors, there is no add-on factor. This type of building usually has its restrooms within the suite and they can account for 5 to 10 percent of the rentable square footage.

I know that price per square foot is how most people compare different spaces and there is nothing wrong with that. But there are add-on factors to consider and some layouts are more efficient than others with fewer corridors and dead ends.

As a tenant representative, my job is to find you the ideal space that best meets your needs regardless of the measurement.  I work with my clients to find the workspace that allows them operate to most efficiently while  also helping in recruiting top talent.

While Landlords generally quote price per “rentable” square foot, it is more useful to consider price per “usable” square foot, price per employee or simply total monthly cost of occupancy just like you’d compare a car payment or a mortgage payment.

Square footage and price per square foot are reliable guides but there is more to consider because “not all square feet are created equal.”

It’s best to have a tenant rep on your side who can navigate this and other important issues and best of all, it costs you nothing. Call text or email me for more information and stay tuned to

About Ken

Sr. Vice President Brokerage and Tenant Representation at Levy Realty Advisors, LLC
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