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A load factor, also known as a loss factor, is a metric that compares the amount of space a tenant pays for in a commercial lease versus the amount of space they actually use. The load factor or a commercial lease is calculated with the formula below: Rentable Square Feet/Usable Square Feet = Load Factor.
In short, the load factor is the percentage of space on a floor or building that is not usable and is expressed using the simple formula of rentable area divided by usable area minus one.
A load factor, also known as a loss factor, is a metric that compares the amount of space a tenant pays for in a commercial lease versus the amount of space they actually use. The load factor or a commercial lease is calculated with the formula below: Rentable Square Feet/Usable Square Feet = Load Factor.
First, find out how much total floor area a building has. Then, subtract the shared square footage to determine the usable square footage. The owner or owner's agent should be able to give you these numbers. Then divide the total floor space by the USF to get the load factor.
Although this may seem pretty cut and dry there are actually two types of square feet that are reference in common commercial real estate transactions: RSF (Rentable Square Feet) and USF (Usable Square Feet).
The Rentable Area of floor area is computed by measuring to the inside finished surface of the dominant portions of the permanent outer building walls, excluding any major vertical penetrations of the floor. No deduction is made for columns and projections necessary to the building.
Calculating the Load Factor Now subtract the square footage of the common areas. You're left with usable square footage, at least if you're leasing the entire building rather than space in a mall or strip mall. Divide the total space by the usable square footage to arrive at the load factor.
In short, the load factor is the percentage of space on a floor or building that is not usable and is expressed using the simple formula of rentable area divided by usable area minus one.
To calculate rentable square footage for a smaller (less than full-floor) tenant, first multiply the usable square footage by the floor common factor, then multiply that result by the building common factor.
Updated October 03, 2019. The load factor is a term that refers to the method of calculating the total monthly rent costs to a commercial tenant. It combines usable square feet in addition to a percentage of the square feet of common areas that the tenant is expected to benefit from.
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