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Understanding rentable square feet in a commercial lease

When it comes to renting property here in Orange County, understanding the lingo could help clear up potential surprises for a tenant. Unless everyone understands the basic definitions involved in a commercial lease, it can be difficult to negotiate. One of the definitions that many landlords understand, but tenants may not, is "rentable square feet."

A tenant may think that rentable square feet equals the amount of usable square feet. However, rentable and usable may have separate definitions for the landlord than they do for the tenant. A prospective tenant may want to clarify with the landlord what he or she includes in rentable space.

Usable square feet are those included within the walls of the space a tenant is looking to rent. The rentable square feet include more, however. This often includes a portion of the common areas as well such as elevator shafts, utility closets and other public areas.

When added to the usable square feet, the base rent increases. This is something that a tenant needs to know when going in since it will increase the amount of the base rent. If a tenant has a certain number in mind regarding rent, this difference in definition needs to be taken into consideration.

In order to avoid these types of surprises when it comes to the bottom line regarding a rental payment, it may be a good idea to have some help. Seeking the counsel of an Orange County attorney who routinely handles commercial lease agreements could get questions answered that a potential tenant may not even have known to ask. In the end, it could make the difference between obtaining a more tenant-friendly lease.

Source: cpexecutive.com, "Identifying & Avoiding Commercial Lease Pitfalls", Daniel Suckerman and Kimberly Lomot, May 22, 2018

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