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GLA commercial property

GLA

GLA in CRE is an abbreviation for gross lettable area. It is generally comprised of office, warehouse, factory, or shops.

High level explanation

This is the space that a commercial property landlord bases his rent and expenses charges to a tenant on.

It is normally expressed as square meters or square feet.

GLA is also known as “rentable area

Other – tenant costs

  • The space categorised as GLA is used to assign both rentals and expenses to tenants. For example, let’s say there is 150 sqm of office. Office rental of R120 / sqm and rates and taxes recoveries of R25 / sqm will be applied to the 150 sqm.
  • Another category of space (falling outside the definition of GLA) is: Supplementary area – rent attracting (but not expense attracting). This is generally made up of space such as storage (office), terrace, yard etc. While a space-driven rental is charged, expenses for this space are not allocated to the tenant. For example, let’s say there is a terrace of 20 sqm. Terrace rental at R60 / sqm will be charged on the 20 sqm space (but no share of the other costs will be assigned to the 20 sqm).

Insider info

The values displayed for rent by landlords are generally inclusive of “linked areas”**. Thus, your paced-out area occupied (aka usable area) is different to the GLA value is on your rental schedule. (Whether this is perceived right or wrong, there are cases for both arguments, this is the global industry standard)

Dealing with an example

  • You as tenant see 500 sqm rentable area / GLA on your rental invoice / lease agreement / offer to lease.
  • You pace out your office, but count only 450 sqm (usable area)
  • That extra 50 sqm is your calculated pro rata share of the “linked areas” (required for your 450 sqm usable area to be “live-able”)
  • 450 sqm usable area + 50 sqm “linked area” space = 500 sqm
  • Calculation of the 50 sqm “linked area” share: the 450 sqm is 10% of the total 4,500 usable area office space. The “linked areas” are 500 sqm. 10% x 500 sqm = 50 sqm

More technical

For ease of understanding, space is classified below according to how both rent and expenses are charged / not charged to tenants. This may vary from landlord to landlord, but the below represent the general case.

GLA includes:

  • Primary space (aka usable area) such as offices, warehouse, factory, shops, and
  • “Linked areas”** (aka remote common areas integral to building) such as
    • Changing rooms, guard houses, ablutions, cleaners’ cupboards
    • Plant rooms, lift motor rooms, maintenance rooms
    • Canteen, day care facilities, fitness areas and prayer rooms

GLA excludes:

  • Other areas
    • Supplementary area – rent attracting (but not expense attracting)
      • Storage (office), terrace, yard, parking areas (generally rented on a per-bay basis)
    • Supplementary area – not rent attracting (and not expense attracting)
      • Balcony, decks, patios
  • Not supplementary area (neither space rent nor expense attracting)
    • Lawn, external car parking, equipment yards, cooling equipment

Another category of space is non-GLA space that attracts rent – for example signage, routers and towers. Solar plant is, for now, classified in this category.

IPMS 2 according to the International Property Measurement Standards Coalition*** includes both

  • GLA / rentable, and
  • Supplementary area – rent attracting.

IPMS 2 excludes (but requires it to be separately stated)

  • Supplementary area – not rent attracting
  • Not supplementary area

Even more technical

Mapping IMPS 2 Office and IPMS 2 Industrial to practical terms

GLA includes:

  • “Primary space” or “usable area” such as offices, warehouse, factory, shops | “Area A“, “Area B“, “Area E” and IPMS 2 – Inclusions
  • “Linked areas”** (aka remote common areas integral to building) such as
    • Changing rooms, guard houses, ablutions, cleaners’ cupboards | “Area D” and IPMS 2 – Inclusions
    • Plant rooms, lift motor rooms, maintenance rooms | “Area C
    • Canteen, day care facilities, fitness areas and prayer rooms | “Area F” and IPMS 2 – Inclusions

GLA excludes:

  • Other areas
    • Supplementary area – rent attracting (but not expense attracting)
      • Storage (office), terrace, yard, internal parking areas – e.g. basement bays (generally rented on a per-bay basis) | Falling into “Area H” and IPMS 2 – Inclusions
    • Supplementary area – not rent attracting (and not expense attracting)
      • Balcony, decks, patios; internal loading bays, mezzanines | “Area H” and IPMS 2 – Included but state separately
  • Not supplementary area (neither space rent nor expense attracting)
    • Lawn, external car parking, equipment yards, cooling equipment; external loading bays, sheltered areas outside external wall | “Any other areas“, “External car parking“, “Decks, patios not forming part of the building structure” and IPMS 2 – Excluded but state separately

*** International Property Measurement Standards Coalition is a global body of industry experts who seek to standardise CRE terms. The hope of this (at last count) 89 member body is to reduce the confusion, and provide consistent measurement standards for the industry. IPMS 2 was formalised in November 2014.

Rationale: “Current terminology used to describe floor area (such as rentable area, usable area, leasable area, net internal area, net lettable area and carpet area) means different things in different markets. This results in confusion for owners and occupiers working internationally. For example, an organisation occupying 10,000 sqm in one country could find the identical space described as 12,000 sqm, or 129.1K SqFt in another”

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