It's slightly more involved than calculating the difference by percentage between the rentable and usable square footage. Here is the formula for computing the loss factor:
- Loss Factor = (Rentable Square Footage - Usable Square Footage) / Rentable Square Footage
To use this formula, you must know the rentable square footage and the usable square footage of the space you are considering. You can find the rentable square footage in the property's marketing materials, but you will need to measure the office space to determine the usable square footage.
Once you have these figures, subtract the usable square footage from the rentable square footage to determine the amount of space that is not usable by the tenant. Then, divide this amount by the rentable square footage to get the loss factor as a percentage.
For example, if an office space has rentable square footage of 3,000 square feet and a usable square footage of 2,000 square feet, the loss factor would be 33.3%.
- Loss Factor = (3,000 - 2,000) / 3,000 = 0.333 or 33.3%
This means that 33.3% of the rentable square footage lies outside the walls of the office space.
Landlords do not provide the usable square footage of office space. Why is that? Two reasons. One, they would like prospective tenants to calculate the price per square foot based on the rentable square footage - i.e., the lower number. Two, and perhaps more importantly, they don't want to provide inaccurate information for legal reasons. If five people measure an office space, they're likely to arrive at five different figures.