CRE space types
Why is this important?
As you know, not all CRE space types are the same.
If you don’t classify your space correctly, you are at risk of providing wrong information. (To prevent this, Gmaven assigns default space types to your units, and this article explains more)
To unpack further, CRE space (and rental income) is broken down like below
- Space – made up of the following different CRE space types
- GLA or rentable area: rental generating, expense attracting, the area requested by tenants
- Supplementary space rent attracting: this space is rental generating, not expense attracting – and sometimes has to be leased together with GLA or rentable area above. Examples: office storage, office terrace, industrial yard, parking bays
- Supplementary space not rent attracting: not rent generating, not expense attracting – but sometimes has to be leased together with the space above. Examples: balcony, decks, patio
- Other
- Non-GLA space. Examples: signage, routers and towers
We unpack why this classification is important to you and your clients below.
What are the challenges?
Challenge 1: usable area or GLA lense
When tenants think about space to rent, they are either thinking about usable area or GLA / rentable area.
They are not thinking of the other space types.
When tenants are thinking about rentals per square meter, they are thinking in terms of usable area or GLA / rentable area.
As with above, they are not thinking of the other space types. (Even though they exist, and are relevant).
So we, collectively, first need to record and organise the information into the relevant space type categories. Then we need to display this information in a way that is accurate and fair, but also relevant for industry outsiders (and understandable).
Challenge 2: averages and sums
What happens when we have many units making up a space. But users want only one number.
We need to average or sum the many into one.
The challenge: what numbers go into these calculations, and what are excluded?
For example, you have an industrial property that is made up office, workshop and warehouse (all GLA) with lets say some storage and yard (supplementary rent attracting). For the sake of simplicity, let’s say that all rentals are gross. How much, excluding expenses paid over gross rental, will a tenant pay every month?
Well it depends what we are talking about. If we’re talking about gross rental for GLA, this is a different value to rental for GLA plus the supplementary space.
To make it more complex, what is the weighted average rental per sqm that a tenant will pay? Again, this depends if we’re talking about weighted average rental for GLA space, or for GLA and supplementary space in total. Because these values differ.
Challenge 3: introducing expenses
Expenses are generally only paid on GLA or rentable area.
While expenses are generally never paid on supplementary space (either rent attracting or not rent attracting).
Expenses can be assigned to non-GLA space.
However care must be applied when calculating total monthly expenses payable, or average expenses per square meter.
What have we done about?
We display rental information in brochures and on vacancy schedules prominently by GLA or rentable area.
(We display, less prominently, the SRA and SNRA space and related rentals, where applicable)
We allow all complex space units to be categorised into one of the three space types.
We pre-assign unit sub-categories into space types, to save data capture time.
We do the sums to make the space categorisation, space totals, and rental averages obvious – to help you explain to industry outsiders
