Rentable area is not something anyone measures. It is a calculation: the floor a tenant has to itself, plus that tenant's allocated share of the corridors, lobbies, washrooms, mechanical rooms and amenity space the whole building uses. The load factor is the ratio that does the adding, and it is why a suite you measure at 5,000 square feet can appear on a lease as 5,900.
What gets measured and what gets derived
Three numbers describe the same floor, and only two of them come off a tape.
- Gross area is the whole floor plate inside the exterior walls, stair and elevator shafts included. It is a fact about the building.
- Usable area is the space a tenant has exclusive use of. The current BOMA office standard calls the tenant portion of it occupant area. Also a measurement.
- Rentable area is usable area plus an allocated share of everything shared. It is derived, and the allocation method is a choice someone made.
Every shared square foot gets pushed out to somebody, so in a fully leased building the tenants' rentable areas add up to close to the entire building. That is the design intent: the owner recovers the lobby through the suites.
How the ratio is built
Load factor is rentable area divided by usable area. A factor of 1.18 means the rent is charged on 18 per cent more floor than the suite contains. Stated as a percentage instead of a multiplier, the same number is called the add-on factor, and 1.18 becomes 18 per cent.
The 2017 BOMA office standard offers two allocation routes. Method A builds two separate factors, one for floor service areas and one for building service areas, so a tenant on a floor with a large elevator core carries more of that core. Method B applies a single building-wide factor to every tenant. Same building, two defensible numbers, and your lease runs on whichever one the landlord used.
One phrase deserves suspicion. "Modified BOMA" means someone started from the standard and changed something, which makes it not a standard. Ask what was modified and get the answer in writing.
Converting two quotes to the same basis
Quoted rent per square foot is per rentable foot. Two buildings at the same headline rate therefore rarely cost the same money. Convert both:
- Ask for the usable area and the rentable area of the specific premises, as two numbers. Not the building average.
- Divide rentable by usable. That is the load factor for your suite.
- Multiply the quoted rent per square foot by that load factor. The result is your cost per usable foot.
- Compare those two results, and ignore the headline rates.
Building A quotes $32 per square foot with a 1.12 load factor, so $35.84 per usable foot. Building B quotes $30 with a 1.25 load factor, so $37.50. B looks two dollars cheaper and costs $1.66 more for every foot your people can stand in.
Where this goes wrong
Four errors account for most of the damage.
- Treating the load factor as a fixed property of the building. It moves with the allocation method, with which floor you take, and with what the landlord classified as amenity. It is a number to question, not a constant to accept.
- Planning on rentable area. Desk counts, furniture plans and occupancy loads all run on usable area. Size the fit-out off the rentable figure and you will order space you do not have.
- Comparing measurements from different editions. A building last measured in 2010 and one measured in 2017 were measured under different rules. The figures are not interchangeable.
- Forgetting that the error repeats monthly. Operating cost and common area recoveries are usually allocated on proportionate share of rentable area, so an inflated rentable figure raises the base rent and the annual common area reconciliation with it.
What the 2017 edition changed
BOMA International published the current office standard on October 16, 2017, replacing the 2010 edition. Balconies, covered galleries and finished rooftop terraces held for a tenant's exclusive use may now count toward rentable area. Major vertical penetrations at their lowest level are no longer excluded. The public pedestrian thoroughfare boundary condition came out, and the standard introduced a new method for allocating amenity and service areas.
The effect on any one building depends on its shape, so there is no general uplift figure to apply. For scale, Gensler remeasured a building under both editions and reported about 3 per cent more rentable area under the 2017 rules.
Residential square footage answers to a different standard
Area figures do not travel between asset classes, which matters if you run a mixed-use building and read both kinds of document in the same week. In Alberta, residential real estate licensees must use the Residential Measurement Standard when they measure and advertise a property, and its rules look nothing like the office ones.
RMS counts above-grade space only. A floor level with any portion below grade is excluded, however finished that basement is. A room needs 2.13 metres (7 feet) of floor-to-ceiling height to count, and under a sloped ceiling the area down to 1.52 metres (5 feet) counts as long as some part of that room reaches 2.13 metres. Detached houses, semi-detached houses and townhouses are measured at the exterior wall at the foundation. Condominium units are measured paint-to-paint at floor level, so the walls are not in the number. Garages, parking and storage are out.
A condo advertised at 900 square feet under RMS and a suite leased at 900 rentable feet are describing different things, and neither one is describing the floor you could carpet.
Get these four things in writing
- The usable area and the rentable area of the exact premises, each as its own number.
- Which standard and which edition produced them, and whether anything was modified.
- Whether the allocation used a single building-wide factor or separate floor and building factors.
- What happens to the stated areas if the building is remeasured during your term.
The last one carries the most risk. A remeasurement clause with no cap on the resulting change lets the rentable area move, and the rent with it, while the space you occupy stays exactly the same size.