Unlocking the Secrets of Net Rentable Area
Net rentable area, often referred to as rentable area, net rentable square feet, or usable area, is the lifeblood of property rental. The simplicity of its definition belies its importance: net rentable area is the space that a landlord can charge rent for.
Understanding the Calculation§
To calculate the net rentable area, start by measuring the overall square footage of the space, floor, or entire building. From this total, subtract all vertical penetrations, which are aspects of the structure making parts of the area non-usable. These include:
- Elevator shafts
- Stairways
- HVAC venting systems
- Mechanical shafts
Crucially, no deductions are made for structural necessities such as columns, load-bearing walls, or other required projections. Mechanical rooms too are generally left out of the deductions.
Real-World Application§
Consider a luxurious penthouse apartment serviced by elevators. The total physical area might include the space taken by the elevator shaft. To derive the net rentable area, the space of the elevator shaft is subtracted from the total physical area of the penthouse.
Here’s how it might look:
- Total Physical Area: 2000 sq ft
- Elevator Shaft: 100 sq ft
- Net Rentable Area: 2000 sq ft - 100 sq ft = 1900 sq ft
Such calculations are essential for setting accurate rental prices, negotiating leases, and understanding the potential revenue from a property.
By mastering the considerations that go into determining the net rentable area, property managers and owners can maximize their rental yield and better manage their properties.
Related Terms: Gross Leasable Area, Usable Square Footage, Floor Area Ratio, Real Estate Management.
