The terms rentable and usable sqft area are common when dealing in the property market. But, these terminologies are mainly used in the commercial property market. So, today when the demand for workplaces and offices are at its peak then you must know the importance of these terms.
1. What is Usable Square Feet?
The Usable square feet is the area that is fixed for the tenant where he/she can perform the business activities.
The tenant eligible to use the actual area of a commercial property is known as the usable square feet or USF. This area excludes usage of lobbies, common spaces, staircases, hallways and public washrooms by the tenant. But, here are two conditions for the same. In the first case, if the tenant has leased an entire floor to carry out its professional activities then he/she can make use of all facilities that are designed within the property premises.
But if the tenant signed an agreement for partial floor lease, then he/she is entitled to use only the facilities that fall in the jurisdiction of its part of the property.
2. What is Rentable Square Feet?
The rentable square feet is often known as RSF is the share of the leased property for which a tenant pays a rental amount. This deal includes areas such as public washrooms, lobbies and more areas that are designed as per the layout.
In this scenario, the rental amount is accumulated according to the commercial structure where you share some areas like mentioned-above.
3. Difference between USF and RSF
The basic difference between the usable square feet and rentable square feet is known as the load factor. This is popularly known as CAF i.e. the Common Area Factor. A prospect must be aware of this terminology before finalizing a commercial deal as it lets you know about what are you getting for what cost.
The load factor, however, differ in commercial areas also as the outlets in the shopping malls have much higher CAF in comparison to the small office spaces.
It has to be noted that at the time of calculating the yearly rental amount, the RSF matters over USF.
4. Ways to calculate Load Factor
Load Factor = Rentable Square Feet – Usable Square Feet / USF, which means that RSF = Load Factor* USF + USF
5. Example to Understand Better
This case study will offer more clarity to the prospects. Let suppose the tenant considers two commercial spaces of 10,000 sqft each and the rental amount for both of them are same. But, the difference in the load factor let him/her know which one to finalize.
Here the load factor is 20 percent and the area is 10,000. Then the formula that will come to use is:
RSF = 10,000 x 0.20 = 2000
RSF = 10,000 + 2,000 = 12,000
Here the load factor is 10 percent and the area is 10,000. Then the formula that will come to use is:
RSF = 10,000 x 0.10 = 1000
RSF = 10,000 + 1,000 = 11,000
The prospect will find figure out the difference and will opt for the option that meet his/her requirements in a budget-friendly manner.