Tap to get financing
Industrial Property Loan
Financing Options
Permanent Senior DebtLife CompanyCMBSBankConstructionBridgeMezzanineSmall BalanceSBAFind the Right Lenders
Resources
Property CharacteristicsInvestor GlossaryIndustrial Property InsuranceIndustrial Finance BlogAsset Types
For Brokers
Get financing →
Newly Published
Mar 7 at Industrial Property Loan
Environmental Due Diligence in Industrial Real Estate
Jan 11 at Industrial Property Loan
Your Guide to Smart Industrial Real Estate Investing
Aug 26 at Industrial Property Loan
Rate-and-Term Refinance in Industrial Real Estate
Explore the Janover Network
May 8 at HUD Loans
The 2025 Developer's Guide to HUD Lender Matching
Apr 22 at Janover Inc. Investor Relations
Janover Inc. Announces Corporate Name Change to DeFi Development Corporation
Apr 16 at Janover Inc. Investor Relations
Janover Inc. to Host X Spaces Conversation on NAV Premiums
Was This Article Helpful?
Investor Glossary
2 min read
by Jeff Hamann

Usable vs. Rentable Square Footage in Industrial Real Estate

Understanding the difference between these two key square footage metrics is critical to calculating your lease rate correctly.

In this article:
  1. What Is Usable Square Footage?
  2. What Is Rentable Square Footage?
  3. Related Questions
  4. Get Financing
Start Your Application and Unlock the Power of Choice Experience expert guidance, competitive options, and unparalleled industry expertise.
Click Here to Get Quotes →
$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by a Credit UnionClick Here to Get Quotes!

When looking to lease space in a commercial real estate property, one of the main determinants of a tenant’s lease rate is the amount of square footage considered under the contract. However, commercial leases rarely use only the square footage a tenant will occupy as the basis for a lease calculation, and so it is important to know the difference between two metrics: usable square footage and rentable square footage.

What Is Usable Square Footage?

Usable square footage refers to the square feet a tenant will exclusively have the right to occupy in a property. In an industrial property, this would be any warehouse and office space the tenant has sole access to, but it would exclude any common areas, like bathrooms, hallways, and amenity space that may exist in multi-tenant industrial assets.

What Is Rentable Square Footage?

Rentable square footage is the basis for a tenant’s rental payments and is calculated by taking usable square footage and adding a pro rata portion of a building’s common areas. For example, if a distribution center has two tenants, each with 30,000 square feet of usable square footage, plus 5,000 square feet of common space, each tenant would pay their lease rate calculated on the basis of 32,500 rentable square feet.

In the case of a single-tenant building, rentable and usable square footage would be the same, as the property’s tenant has exclusive access to everything within the building.

Related Questions

What is the difference between usable and rentable square footage in industrial real estate?

In industrial real estate, the difference between usable and rentable square footage is not usually applicable. Usable square footage (USF) refers to the area a commercial tenant can actually use, which generally includes hallways and private restrooms, as well as structural features like columns and recessed entries. Rentable square footage (RSF) refers to the area a tenant pays rent for, which includes the tenant's USF plus a portion of the common areas. Source

How is usable square footage calculated in industrial real estate?

Usable square footage in industrial real estate is calculated by subtracting the common areas from the total square footage of the building. Common areas include lobbies, stairwells, elevators, and other shared spaces. The Building Owners and Managers Association (BOMA) has created standards for measuring commercial buildings, which are often used to calculate usable square footage. Tenants considering signing a long-term lease may wish to have the space remeasured by a certified professional before making a final decision.

Source

What factors affect the rentable square footage of industrial real estate?

The rentable square footage of industrial real estate is affected by the load factor, which is calculated by dividing the rentable square footage by the usable square footage. The load factor helps commercial tenants determine how much common space they will be paying for. The load factor can range from as low as 3% to as high as 25%, depending on the amenities offered. Additionally, column spacing can impact the usable square footage of an industrial property, as columns spaced irregularly or at small intervals can limit the movement of forklifts and other loading equipment, as well as impact the configuration of shelves and other storage racks. Wider or deeper bay spacing near loading docks can provide an additional benefit by making loading operations safer and more efficient. Source and Source.

How does usable square footage affect the value of industrial real estate?

Usable square footage does not typically affect the value of industrial real estate, as it is not usually applicable to multifamily and industrial properties. Industrial properties are usually valued based on the size of the land, the condition of the building, and the potential for future development. For example, a property with a large lot size and potential for expansion may be more valuable than a property with a smaller lot size and no potential for expansion. Additionally, the condition of the building and the quality of the construction can also affect the value of industrial real estate.

What are the benefits of renting industrial real estate with higher usable square footage?

The benefits of renting industrial real estate with higher usable square footage include more space for operations, increased storage capacity, and the ability to accommodate more employees. Additionally, higher usable square footage can provide more flexibility for businesses to expand their operations in the future.

For example, a business that leases an industrial property with higher usable square footage may be able to add more production lines or storage racks, or even expand their office space. This can help businesses save money in the long run, as they won't have to move to a larger space if their operations grow.

For more information on Usable Square Feet vs. Rentable Square Feet in Commercial Real Estate, please visit this page.

What are the drawbacks of renting industrial real estate with lower usable square footage?

The main drawback of renting industrial real estate with lower usable square footage is that it can limit the movement of forklifts and other loading equipment, as well as impact the configuration of warehouses’ storage racks. This can reduce the efficiency of operations at most distribution and logistics buildings. Additionally, if a building has narrower or shallower bay spacing near loading docks, it can make loading operations slower and less efficient.

Source: What to Know Before Making Your 1st Industrial Property Investment

In this article:
  1. What Is Usable Square Footage?
  2. What Is Rentable Square Footage?
  3. Related Questions
  4. Get Financing

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →

Janover: Your Partner in Growth

At Janover, we offer a wide range of services tailored to your unique needs. From commercial property loans and LP management to business loans and services for lenders, we're here to help you succeed.

Learn more about Janover →
Commercial Property Loans

Get the best CRE financing on the market.

Explore Financing Options →
LP Management

Syndicate deals on autopilot with Janover Connect.

Discover LP Management →
Business Loans

Match with the right kind of loan, in record time.

Find Business Loans →
For Lenders

Supercharge your loan pipeline. Unlock more deals.

Boost Your Loan Pipeline →
Industrial Property Loan

Industrial Property Loan is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Commercial Real Estate Loans, SBA7a Loans, HUD Loans, Janover Insurance, Janover Pro, Janover Connect, and Janover Engage.

Janover Tech Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

[email protected]

Site Information

Privacy Policy
Terms of Use


For Commercial Mortgage Brokers

This website is owned by a company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

This website utilizes artificial intelligence technologies to auto-generate responses, which have limitations in accuracy and appropriateness. Users should not rely upon AI-generated content for definitive advice and instead should confirm facts or consult professionals regarding any personal, legal, financial or other matters. The website owner is not responsible for damages allegedly arising from use of this website's AI.

Copyright © 2025 Janover Tech Inc. All rights reserved.

+

Fill out the form below and get the pricing and terms banks can't compete with.