What is Rentable Square Footage?
Rentable Square Footage (RSF) refers to the usable square footage (USF) of a property plus the pro rata share attributable to a particular tenant for access to a common area.
In a commercial lease, the rentable square footage (RSF) states the specific amount of space leased and occupied by a tenant, including the tenant’s share of the property’s common areas, which is most often determined on a pro-rata basis.
How to Calculate Rentable Square Footage (RSF)
The rentable square footage (RSF) measures the rentable area in a multi-tenant commercial property, such as an office building.
The common area of a property constitutes the shared spaces and amenities accessible to all tenants with leases, such as hallways, elevators, stairwells, fitness centers, and lobbies.
In commercial real estate (CRE), the rentable square footage (RSF) matters because the metric serves as the basis that determines the rental payment of each tenant.
The rentable square footage (RSF) metric comprises two components:
- Usable Square Footage (USF) → The usable square footage (USF), or leasable square footage, measures the space occupied by a specific tenant.
- Pro-Rate Share → The pro rata share, or “load factor”, is the ratio between the rentable square footage (RSF) and the usable square footage (USF).
Therefore, the rentable square footage (RSF) is calculated as the sum of the usable square footage (USF) and the pro rata portion of the common area.
The difference between the rentable square footage (RSF) and usable square footage (USF) reflects the concept of the load factor, or “common area factor”.
In commercial real estate (CRE), the load factor is normally between the range of 1.10 to 1.20 (i.e. a 10% to 20% differential), but the ratio is specific to the property type, among other variables.
The rentable square footage (RSF) is calculated by multiplying the usable square footage (USF) by the load factor.
Learn More → Usable Square Footage Measurement Standards (Source: BOMA)
Usable vs. Rentable Square Footage: What is the Difference?
In commercial leasing, the usable square footage (USF) is the space occupied by a tenant, whereas the rentable square footage (RSF) is the tenant’s occupied space and a proportion of the common area spaces.
For instance, the common area of a commercial office building can include:
- Lobbies
- Shared Hallways
- Communal Restrooms
- Elevators
- Fitness Facilities (or Gyms)
- Shared Kitchen Spaces
The tenants of a commercial property with a common area must collectively contribute toward the maintenance of the shared space.
Hence, the rental payment per month is determined based on the RSF, rather than the USF.
The commercial properties with more amenities and a greater percentage of common area relative to the total area exhibit a higher load factor – all else being equal.
Rentable Square Footage Formula (RSF)
The formula for calculating the rentable square footage (RSF) is the usable square footage (USF) of a tenant multiplied by the load factor.
Where:
- Usable Square Footage (USF) = Total Floor Area (TFA) – Common Area
- Load Factor = Rentable Square Footage (RFS) ÷ Usable Square Feet (USF)
In practice, the rentable square footage (RSF) is measured on a per-tenant basis – thus, the building tenants with a greater amount of leased space will have a higher load factor.
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We’ll now move to a modeling exercise, which you can access by filling out the form below.
Rentable Square Footage Calculation Example
Suppose we’re tasked with calculating the rentable square footage (RSF) of a commercial office building.
The multi-tenant commercial property has a rentable square footage (RSF) of 120k SF, while the common area shared amongst the building tenants is 20k SF.
- Rentable Square Footage (RSF) = 120k SF
- Common Area Size = 20k SF
Therefore, the usable square footage (USF) is 100k SF, which we derived by subtracting the common area size from the RSF of the property.
- Usable Square Footage (USF) = 120k SF – 20k SF = 100k SF
The load factor, or “common area factor”, of 120% (or 1.2) is determined by dividing the rentable square footage (RSF) by the usable square footage (USF).
- Common Area Factor = 120k SF ÷ 100k SF = 120.0% (or 1.2)
While the rentable square footage (RSF) was stated as an explicit assumption at the start, we’ll calculate the RSF of the commercial building as if the metric was never provided.
The rentable square footage (RSF) of 120k SF is arrived at by multiplying the usable square footage (USF) by the load factor, which matches our original assumption.
- Rentable Square Footage (RSF) = 100k SF × 120.0% = 120k
Note that our exercise is intended to illustrate the relationship between the three variables (RSF, USF, and Common Area Factor) – hence, the implicit assumption here is that the same pro rata share applies to all tenants, which is seldom the case.
That said, if an individual tenant were to occupy 25k SF in space at the property, the rental payment owed by the tenant is based on a rentable square footage (RSF) of 30k SF.
- Tenant Rentable Square Footage (RSF) = 25k SF × 1.2 = 30k SF
