Loss Factor

You make an appointment to see a New York City commercial space that, judging from some online photos, appears to be ideal for your business. It’s got a great location, reasonable rent, and just enough square footage. But when you get there, there seems to be less space than was advertised – significantly less. You’ve just experienced loss factor. What is Loss Factor? The loss factor is the difference between “rentable square footage” (RSF) and “usable square footage” (USF). RSF incorporates a corresponding proportion of common areas such as the lobby, corridors, public bathrooms and elevator vestibules. USF, however, is the space allocated for your company’s use. It follows that USF is always smaller than RSF. How is Your Company… Continue reading

Posted in Commercial Leasing 101.

Unlike most areas of the country, in Manhattan commercial landlords employ the concept of renting “rentable” square feet when they lease a space, be it office space, retail space, medical space, showroom or loft space. To understand this concept more clearly one needs to recognize the premise that a landlord always wants to rent every square foot of space in his building. Naturally, this is not possible from a physical standpoint since designated common areas of the building, such as public bathrooms, stairwells, elevator shafts, mechanical rooms, common corridors on divided floors, etc are meant for all tenant’s use and therefore cannot be leased to individual tenants. Hence the landlord apportions a percentage of the common areas to each tenant… Continue reading

Posted in Manhattan Office Space.
Don’t Fear the Loss Factor

Few terms make brokers and tenants in New York City squirm these days like “loss factor.” Loss factor is essentially the amount of communal space for which a tenant pays, but which is not included in the actual size of the office. Examples of common areas that contribute to loss factor can include the building’s lobby, janitor closets and elevator shafts. Loss factor made headlines recently when a news story reported on a small office tenant who sued his landlord for nearly $300,000 due to damages incurred by the owner’s apparent miscalculation of rentable square footage (RSF). The story illustrated why loss factor is an important term to understand before signing a lease. Brokers Know Areas with Low Loss Factor The… Continue reading

Posted in Commercial Leasing 101.