When searching for a commercial real estate space, you’ll come across terms like “rentable square feet” and “usable square feet.” These terms can be a bit confusing, but understanding the difference between them is crucial to making informed decisions about your lease. The goal of this blog post is to break down these concepts in simple terms to help you navigate the commercial real estate landscape with confidence.
Rentable Square Feet (RSF), refers to the total space within a commercial property that you’ll be charged for in your lease. It includes not only the space you’ll occupy but also shared or common areas that benefit all tenants, such as hallways, lobbies, restrooms, and sometimes even a fitness center or rooftop garden. These common areas are distributed among all tenants, so each tenant is responsible for a portion of them.
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Think of RSF as the entire pie, with your slice representing the area you’ll be using for your business activities. Landlords calculate your rent based on the RSF, which accounts for your actual space plus a proportionate share of the common areas. This is a standard practice in commercial real estate, as it allows the landlord to cover maintenance and operating costs for the entire property.
Usable Square Feet (USF), is the portion of the space that you have exclusive control over and can use for your business operations. It includes your private offices, cubicles, conference rooms, and any other areas that are exclusively designated for your company’s use. USF is the part of the space where your business operations take place.
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To put it simply, USF is your slice of the pie. It’s the area you can arrange and use to suit your specific needs without having to share it with other tenants. This is the space that directly contributes to your business operations and is often the primary focus of your lease negotiations.
The primary difference between RSF and USF is that RSF includes shared or common areas, while USF only encompasses the space that you have exclusive control over. Understanding this difference is essential because your lease terms, including the rental rate, are typically based on the RSF.
When negotiating a lease, it’s crucial to be aware of the ratio between RSF and USF. If you require more USF for your operations, you may want to negotiate for a larger proportion of the common areas to be included in your RSF.
Consider both the RSF and the USF to assist in making accurate comparisons between different properties. This will help you determine the true value of the space and whether it meets your specific needs.
Your rent is based on the RSF, so ensure that your budget takes into account not only the base rent but also the common area maintenance (CAM) costs associated with your portion of the common areas.
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Understanding the difference between rentable square feet (RSF) and usable square feet (USF) is essential when exploring commercial real estate leases. Being aware of these terms and how they impact your lease can help you make informed decisions and secure the right space for your business needs.
If you have any questions or need further clarification, don’t hesitate to reach out to our experienced team for guidance on your commercial real estate search.
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For more helpful information check out our blog post titled: Q4 Commercial Real Estate’s Craig Byers and Jason Rogers Break Down the Triple Net Lease (NNN).
Let one of our knowledgeable listing agents partner with you to find a commercial real estate property perfect for your business needs, and assist you in working through the lease process. Contact Jason Rogers, Craig Byers, or Austin Geasland at 319-294-3339 today!
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