The 5 Key Commercial Lease Terms for Restaurants:
Get “On the Same Page” As Your Landlord, Figuratively and Literally
Rentable Square Feet v. Useable Square Feet
Finding and leasing commercial space has a different set of rules than for residential rental properties. One golden rule, however, remains true in both cases: thou know and understand the key lease terms and ensure the lease agreement is specific and clear. In this series, we will analyze the key terms of a commercial lease relationship. This is the third part of a six-part series, examining five key terms in your commercial lease agreement. Today, we’ll discuss the nuances of Rentable Square Footage and Useable Square Footage and importance in understanding the two.
You should understand, and your lease agreement should make clear, the premises Rentable Square Feet vis-à-vis the Usable Square Feet. Usable Square Feet, as the name suggests, is the square feet of the premises that you are actually occupying, such as the dining room, kitchen, storage space, and office space. Rentable Square Feet consists of your Usable Square Feet plus some amount of shared space, such as hallways, bathrooms, and so forth. While you only occupy the Usable Square Feet, your rent payment will be based on Rentable Square Feet. Accordingly, when shopping for commercial space and reviewing proposed rental rates, keep in mind that the square feet that you occupy will only be a portion of the square feet for which the rent payment is calculated.
In order to promote their properties at a seemingly competitive price per square foot, it is not uncommon for commercial realtors to advertise the price per square foot, based on the Rentable Square Footage. Be savvy to this trick. Before going to see the property, inquire as the Usable Square Footage vis-à-vis the advertised price. Likewise, when viewing a property, be mindful that you’ll be paying for space for which you do not enjoy exclusive control. Inquire into this additional square footage that will be included in your lease agreement and rent obligation.
Next up, we discuss the Common Area Maintenance fees.