How to measure space for tenants, part 1

How much space does the tenant get to use or occupy and is it always the same amount of space that they have to pay for? We measure space in square footage. Then the rent is calculated either on an annual or a monthly basis depending on your market. I am in the Northeast and generally the rental cost is quoted as the annual cost per s/f. If we have a small building or a single tenant (even in a large building) frequently, "what you see is what you get." Meaning if the unit is 1,000 s/f your rent is calculated based on 1,000 s/f. Many buildings, however, are large with multiple tenants. Landlords desire to be paid for "every square inch" of their building. In these properties tenants get to exclusively occupy and use a certain amount of space but they also share "common areas" with all the other tenants in the building. So a tenant ends up occupying net or usable square footage but paying for this space plus their proportionate share of the common area, known as the rentable or gross or billable square footage. Different terms are used in different areas and by various landlords. The important concept is that tenants often have to pay for more space than they occupy. How is space measured? The general authority on space measurement is the Building Owners and Managers Association. Generally, a building is looked at in three ways, certain parts of the building are considered "structural" and would be included in the base rental charge. For example: Thickness of exterior walls, exterior balconies, mechanical penthouse, upper stories of atriums, and major vertical penetrations. The tenants occupied unit square footage is measured from the inside of the walls within the unit and includes all usable space and storage areas. If there are demising walls, internal walls dividing the space, like a private office, that space is included. Tenants must absorb HVAC convectors, columns and interior building projections in their measurements. The common areas of a building may consist of lobbies and atriums (at floor level), public corridors (and include the thickness of the corridor walls), elevators, staircases, public restrooms, janitor, electric and phone closets, mechanical rooms, and loading docks. Such measurements will include the "common areas" on all floors. When a building is constructed an architect or engineer will measure all the space in the building and determine the overall amount of usable square footage and the amount of common area square footage. The percentage difference between the usable and rentable space is known as the loss factor or core factor. For Example: a building is 100,000 s/f in total space, 15,000 s/f of that space is common area. The loss or core factor would be 15%. Landlords are entitled to get paid for all the space in their buildings including the "common areas." Next month we will examine the formulas used to determine what the tenant pays for. Edward Smith, CREI, ITI, CIC, GREEN, RECS, is the regional director of Coldwell Banker Commercial NRT, Eastport, N.Y.