Common rent miscalculations
Office space priced per "rentable" square foot often turns out to be much more expensive than tenants expect because landlords may include space that tenants consider unusable. Normally, you’ll be able to use only 75% to 90% of what you pay for. This difference, the loss factor, depends on three things: the physical configuration of your offices, your landlord’s method of measuring rentable area, and, increasingly, your landlord’s whim.
Rentable area is sure to include a portion of elevators, janitors’ closets, lobbies, stairways, and more. Fair enough. Be aware, however, that some buildings have a higher loss factor than others. Fancy curves or sharp angles, elevator banks placed in the center of the building instead of on the side, and an abundance of columns in your space contribute to a higher loss factor.
In addition, landlords often develop their own methods for measuring rentable area. A landlord may measure from the outside of one exterior wall to another, for example, and include questionably "public" areas like air shafts. Some buildings seem to be measured from gargoyle to gargoyle – façade ornaments unrelated to a tenant’s usable space.
Beyond this, many landlords create an arbitrary loss factor. Once they’ve determined how big a space is, they just inflate the number by, say, 25%, and then call that the rentable area.
To protect yourself, you might hire an architect to measure the space you plan to lease and tell you whether the usable area will satisfy your business’ needs. The architect should use a generally accepted standard, like that adopted by the Building Owners and Managers Association, so you can precisely compare one space with another. Then, whatever number the landlord uses, you’ll know how much you’ll be paying per usable square foot, and you’ll have a more informed basis for negotiation.
On lease renewal, the tenant may also find that the landlord has "remeasured" the space and now claims it’s much larger. A well-known Manhattan landlord told a tenant I know that the tenant’s space had grown 20%. It also demanded a higher rent per square foot – a double blow.