As a tenant representative, it is our goal to be our client’s biggest advocate and help them make the best and most educated decision possible. In order to do this, educating them on terms associated with square feet is important. Every commercial real estate transaction is priced on a PSF (Per Square Foot) basis and defined in total square feet…versus residential transaction that look at number of rooms and other defining characteristics. 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).
Understanding the difference between RSF and USF can mean a monumental cost savings in the long run-as the two numbers can vary anywhere from 3% to 20%. USF refers to the square footage the tenant actually can “use” in their office space. This space can be looked at as the private space a tenant uses to host its business, equipment, furniture, and personnel. On the other hand, RSF refers to everything the USF does, plus common areas of the building such as restrooms, hallways, elevator shafts, stairwells, etc… Therefore this number will be higher than USF which thus begs the question: Are offices usually quoted on a RSF basis or a USF basis?
Unfortunately there is no clear cut answer to the question, as there is no rule as to which needs to be quoted (in USF or RSF). As a tenant representative, it is our job to inquire how the rate is quoted so there are no surprises later. Obviously if the square feet vary 3% to 20%, so does the rental rate.
Tenants are charged for the RSF as they do in fact use these common areas. Therefore, the RSF is tacked onto the rent. Other ways this is called out is the “load factor” or “loss factor.” Sometimes owners will say the loss factor is 10%, which means 10% of the building is taken up by common areas. This also means that if you are renting 1,000 USF, you will be paying for 1,100 total rentable square feet.
In a typical single story, private entrance building, offices can have at the low end a 3% higher RSF. This is due to the fact there is normally less common areas (no hallways, elevators, lobbies, etc…) and merely mechanical/sprinkler rooms. On the other end, multi-story offices can have a 20% higher RSF due to the lobbies, atriums, elevators, common washrooms, etc…
For more information on loss factors, load factors or RSF vs. USF, contact us today…and always make sure you have a knowledgeable broker represent you when looking for office space.