Rentable area

Rentable area CRE

Rentable area, in South Africa, terms, is another word for gross lettable area (or GLA).

The value is expressed in either square meters or square feet.

How rentable area differs to usable area?

Rentable area is generally larger than usable area.

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

Using 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)

More detail

  • That extra 50 sqm is your calculated pro rata share of the “linked areas” (required for your 450 sqm area to be “live-able”)
  • 450 sqm usable area + 50 sqm “linked area” space = 500 sqm rentable area
  • 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

Financial

Tenants are charged rent and expenses on rentable area, and not on usable area.

For example, let’s say there is 150 sqm of office. Both the office rental of R120 / sqm and rates and taxes recoveries of R25 / sqm will be applied to the 150 sqm GLA.

To avoid confusion

Another category of space, falling outside the definition of rentable area or GLA, but still attracting rentals from a tenant is: Supplementary area – rent attracting (but not expense attracting). This category is generally made up of space such as storage (office), terrace, yard, parking bays etc. While a space-driven rental is charged, expenses for this space are not allocated to the tenant.

For example, let’s say, in addition to the 150 sqm of office, 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).
  • Both rental and expenses will be charged on the 150 sqm GLA 

For more info

This term can be vague, and can be confused with other CRE terms. For more clarity, please click through to GLA.

 

Related terms

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