Common Area Factor:
Rentable vs Usable
Usable Square Footage (USF)
Usable square footage is the actual demised office space you occupy from interior wall to interior wall. This space is yours and is not meant to be shared with other tenants.
Rentable Square Footage (RSF)
The rentable square footage is the combination of usable square footage plus a fraction of the building’s shared space. The shared space constitutes the common areas of the building, including restrooms, shared hallways, elevators, stairwells, and storage rooms, cafeteria, lobby, fitness center, utility rooms, etc.
Common Area Factor
The common area factor, also referred to as “load factor” or “add-on factor,” is the increase in the rentable square footage above the usable square footage. The equation that can help you figure out the load factor is as follows:
CAF = (RSF – USF) ÷ USF
If RSF is 10,000 and the USF is 8,000, then the CAF factor is calculated as follows:
CAF = (10,000 – 8,000) ÷ 8,000
However, in the Minneapolis/St Paul, the market common area factor for office space is 15% – 20% even if the actual calculation is greater.
Why Do You Have to Pay for Common Areas?
Landlords expect to be paid rent on every square foot in their commercial building. All common areas cost them money while adding value to the tenants, so the costs have to be passed on to the tenants. Landlords assign all common areas between their tenants based on what percentage of the building each of the tenants occupies. Therefore, you have to pay for common areas mainly because:
- You need to use elevators, hallways and stairways, and bathrooms, which all require maintenance.
- The availability of a pleasant lobby on the ground floor will enhance your visitor’s perception about your business.
- Without an office kitchen, you’ll find the services of a cafeteria in the building handy.
In other words, common areas attract certain costs, including maintenance and repair costs. Since you as a corporate tenant will be benefiting from your access to these common areas, it’s wise when you and your fellow tenants contribute a certain percentage.