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Rentable Area

Rentable Area refers to the total area for which a landlord can charge tenants for occupancy. Rentable Area is a key concept primarily used in commercial real estate, such as office buildings, retail spaces, and industrial properties.

The Rentable Area encompasses not only the actual usable space that a tenant occupies (often termed as “Usable Area”) but also a pro-rata share of the common areas and amenities in the building, such as lobbies, restrooms, hallways, and other shared facilities. This concept allows the landlord to recover costs associated with maintaining the common areas of the building.

The calculation of the Rentable Area is essential for determining the rental rate. It is typically defined and calculated based on standards set by organizations such as the Building Owners and Managers Association (BOMA) to maintain consistency and transparency in the leasing process across the industry.

Here’s a simplified formula:

Rentable Area = Usable Area + Tenant’s Pro – Rata Share of Common Areas

Understanding Rentable Areas is crucial for both landlords and tenants in evaluating, comparing, and negotiating lease terms and rental rates in commercial real estate transactions.