Maximize Your Business Potential with Gross Leasable Area (GLA)
Gross Leasable Area (GLA) is an essential metric used to measure the total floor area that is available for leasing to tenants in a commercial property. This space can include retail stores, offices, or industrial units. Knowing the GLA of a property is important for property owners, managers, and potential tenants as it plays a significant role in determining rental prices and potential revenue.
What is Gross Leasable Area (GLA)?
Gross Leasable Area (GLA) refers to the total area in a commercial property that can be rented to tenants. This metric excludes common areas such as lobbies, stairwells, and hallways. For retail properties specifically, GLA might also leave out spaces such as utility rooms and exclusive store amenities.
Here’s a formula to better understand GLA calculation:
GLA = Total Floor Area - Non-Leasable Areas
Example: Let’s say we have a commercial shopping center with a total floor space of 50,000 square feet. If the non-leasable areas cover 5,000 square feet, the GLA of this property would be:
GLA = 50,000 sq ft - 5,000 sq ft = 45,000 sq ft
The Importance of GLA
Understanding GLA is essential for both property developers and tenants:
- Revenue Calculation: For property owners, the GLA dictates potential rentals and overall revenue generation.
- Space Planning: Tenants can plan their space utilization effectively by knowing the exact area they have access to.
- Valuation Metrics: GLA plays a part in property valuation considering the income-generating potential of the area.
How to Maximize Your GLA
- Optimized Design: Make sure your property layout optimizes usable and leasable areas.
- Efficient Space Management: Use modern techniques for managing the space among tenants, ensuring maximum efficiency.
- Attractive Amenities: Provide desirable amenities while minimizing the footprint of non-leasable areas.
Real World Example
Consider a large shopping mall, ‘Retail Haven,’ with a total area of 120,000 sq ft. After measuring all the non-leasable areas like hallways, maintenance rooms, and shared amenities which total 20,000 sq ft, the GLA of Retail Haven is:
GLA = 120,000 sq ft - 20,000 sq ft = 100,000 sq ft
With a GLA of 100,000 sq ft, the mall can calculate potential rental income and align their leasing strategies accordingly.
Frequently Asked Questions
What is the primary use of GLA in commercial real estate?
The main use of GLA is to determine the amount of rent that can be charged to tenants since it represents the actual rentable space.
How is GLA different from Net Leasable Area (NLA)?
GLA usually includes the tenant’s space plus any associated exclusive areas, while NLA refers only to the nett usable space without any shared areas.
Why should tenants care about GLA?
Tenants should care because it helps them understand precisely what they are paying for and plan their space utilization efficiently.
Conclusion
Understanding Gross Leasable Area (GLA) is indispensable for maximizing the potential of commercial real estate. Tenants and property owners alike benefit from a thorough appreciation of this metric, enhancing their planning, revenue calculation, and overall space management thereby spearheading their success.
Leveraging GLA offers a clear pathway towards optimized business growth and successful property management.
Related Terms: Net Leasable Area, Rentable Area, Commercial Leasing, Retail Space.
