Rentable, usable and carpetable square footage, and loss and add-on factors

Three measures of commercial space

Usable area is the tenant's exclusive-use space under the applicable measurement convention. Rentable area adds an allocated share of common areas, such as shared lobbies and corridors. That allocation does not confer exclusive possession of those common areas. Carpetable area is clear floor area available for floor covering or layout, excluding walls, columns, and similar obstructions; it is not the amount of carpet actually installed. Measurement conventions and lease definitions vary: confirm definitions and percentage bases before comparing offers.

Same difference, different denominators

Suppose rentable area is 1,200 square feet, usable area is 1,000, and carpetable area is 900. The common area allocation is 1,200 minus 1,000 = 200 square feet. Within usable area, 1,000 minus 900 = 100 square feet are excluded from carpetable area.

• Add-on percentage = (rentable minus usable) / usable. Here, 200 / 1,000 = 0.20 = 20%.
• Rentable-to-usable multiplier = rentable / usable. Here, 1,200 / 1,000 = 1.20. Rentable = usable times (1 + add-on): 1,000 times 1.20 = 1,200.
• Loss factor = (rentable minus usable) / rentable. Here, 200 / 1,200 = 0.1667, approximately 16.67%. It measures the share of rentable area that is not usable, not vacancy.
• To recover usable area, divide rentable by (1 + add-on), or multiply rentable by (1 minus loss factor). Thus 1,200 / 1.20 = 1,000.

Do not interchange 20% add-on and 20% loss: their denominators differ. Neither formula substitutes carpetable area for usable area.

Compare rent on the same basis

At $30 per rentable square foot per year, 1,200 times $30 = $36,000 annual rent. Then $36,000 / 12 = $3,000 monthly rent. Cost per usable square foot is $36,000 / 1,000 = $36 annually. A lower advertised rate per rentable square foot need not produce a lower cost for the usable space the tenant needs.