Square Footage

Before leasing (or even purchasing) space for your business, you need know the core factor of the building and how the size of your "premises" is determined.

First, the core factor is the percentage of net rentable square feet dedicated to the building's common areas (common lobby, elevator shaft, common restrooms, common corridors and stairways, etc.).  In the hypothetical above, if both of your current offices had a 15% core factor, then your current 10,000 square feet would result in a net rentable area of 8,500.  If, however, this new building had a 25% core factor, then this 10,000 square feet would result in a net rentable area of 7,500.  Assuming 200 square feet per person, then this 1,000 square foot difference in net rentable area results in 5 less offices than currently provided. 

Furthermore, if you are currently paying $24.00 per gross square foot, then your effective lease rate is around $28.25 per net square foot.  If the new building will also be leased at $24.00, then this difference in core factor means your effective lease rate is $32.00 per net square foot.  This means that the new building will actually cost $37,500 more per year than your existing space.

Second, there are various floor measurement standards such as BOMA, modified-BOMA, GWCAR, among other various informal standards used by different landlords.  The most prevalent standard is BOMA (Building Owners and Managers Association) which is set forth in the Standard Method for Measuring Floor Area in Office Buildings (ANSI Z65.1).  Regardless of which measurement standard is used, the tenant needs to know and understand how the size of their "premises" is determined by the landlord. 

As to the size of the premises, some landlords may measure the premises from the outside wall, some landlords may measure from the interior dominant surface of walls, and some may use a combination.  For a 150' x 150' building, a 9" difference in the where the measurement of the premises begins (interior or exterior) results in a 450 square foot difference.  At a hypothetical market rent of $24.00, this results in a $10,800 difference per year and quickly adds up

Furthermore, some landlords may include a portion of the elevator shaft, mechanical closet, loading dock, and/or stairwells in the calculation of the premises.  It is important for both parties to understand what they are leasing.