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How do you determine the load factor of a commercial space?

On Behalf of | Jan 26, 2022 | Real Estate |

If you are looking to rent office space in a multi-unit commercial building, you may not mind paying a premium for the perfect space. Still, you undoubtedly have a keen interest in keeping rent payments as low as possible.

Multi-unit commercial buildings are ideal for many types of businesses, as they often combine private and shared spaces. That is, in addition to your office, you may have access to a lobby, staircases, elevators or courtyards. Your landlord is likely to charge you for these extras, of course.

What is the load factor?

As OfficeSpace.com points out, a commercial property’s load factor is the proportional amount each tenant pays for the common areas. This factor is important, as it helps you distinguish between how much you are paying for rent and how much you are paying for the privilege of being in a multi-unit commercial building.

How do you calculate the load factor?

Calculating the load factor for a prospective rental requires doing a little bit of math. First, add together all of the private rental space available to tenants. Then, divide the total number of square feet in the building by the total available private rental space.

For example, if there are 10,000 square feet of rental space in a building with 15,000 total square feet, the load factor is 1.5%.

How can you use your load factor calculation?

After calculating the load factor for a commercial building, you can determine your percentage share of rent for common spaces. To do so, simply multiply your rent by the load factor. For example, if your rent is $10,000, your proportional share in a building with a 1.5% load factor is $150.

Ultimately, to ensure you are receiving a good value, you should calculate the load factor of all commercial spaces you are thinking about renting.

Founding Partners Damaso W. Saavedra and Allyson D. Goodwin