In commercial real estate, a property’s size can be evaluated in two major ways: by its usable square footage (USF) or rentable square footage (RSF). Generally, this applies more to office and retail properties with multiple tenants than multifamily or industrial properties. In this blog we will explore the differences between rsf vs usf.
What Does RSF Mean in Commercial Real Estate?
RSF, or rentable square feet, is an important metric in Commercial Real Estate. It defines the total area within a building considered profitable space – it includes space devoted to lobbies, stairwells, hallways, and bathrooms – all of which can be used.
This figure differs from the usable square footage of a property that considers access utilities and unusable sections of a building, such as storage. Many landlords use RSF as a reference point when devising lease terms, as it accurately assesses their financial gain from any given property. Consequently, understanding the concept of RSF is vital for anyone dealing in commercial real estate.
What Does USF Mean in Commercial Real Estate?
Understanding USF in commercial property is essential to assessing potential investments. USF stands for “Useable Square Footage” and represents the amount of space that can be used by a tenant rather than any unusable or dead space within a building. In calculating USF, any shared areas such as lobbies, restrooms, stairways, elevators, and hallways are excluded from the usable area.
It is important to keep in mind that these calculations may vary according to a local jurisdiction’s Building & Fire Codes. Furthermore, mechanical rooms with lost space due to columns or other structural issues are also excluded from this calculation. Leveraging a proper understanding of USF when reviewing properties for investment opportunities adds clarity to accurately assess the earnings potential and ensure proper management of those assets.
How Do You Calculate RSF vs USF?
Calculating the difference between RSF (Rentable Square Feet) and USF (Usable Square Feet) is relatively straightforward. At its simplest, RSF is the total square footage of all rentable spaces in a building, while USF is the actual usable area within those spaces.
Generally speaking, when calculating, one would divide the total RSF by its percentage of shared public space; this will give you an approximation of USF. While minor alterations may be necessary to obtain an exact number due to stairwells and other structural necessities, adding a specific allowance for common areas makes it easy to come up with an accurate figure.
Do All Buildings Have a USF and RSF?
In retail or garden-style office space, your USF (usable square footage) is typically the same as your RSF (rentable square footage). These types of properties have less common areas, and tenants usually have their own restrooms and entrances. So when you’re quoted a certain amount of square footage, make sure to clarify whether it’s USF or RSF.
Load Factor and How it Correlates to RSF
Calculating load factor is an important tool for any business whose building is often subject to varying occupancy levels. It aids in determining the building’s energy efficiency standards and optimizes energy costs by ensuring that the correct amount of heating or cooling is used.
To calculate the load factor, a business must measure its square footage and estimate how much it will be occupied on any given day. Armed with this information, a business can balance its estimated demand for electricity against its actual usage and develop an understanding of what level of power they need to maintain. With these tools, businesses can leverage their load factor calculations to maximize energy efficiency and reduce costly inefficiencies, but more importantly, figure out the total RSF.
RSF vs USF Example
Let’s assume a building has 4,000 RSF of rentable space with a 25% load factor. This would result in 3,000 USF (4,000 RSF / 1.25) of usable square footage. Simply put, this means that the building has 1,000 RSF worth of common areas. An investor would need to consider this when evaluating a potential investment opportunity, as the income generated per square foot (RSF) will be lower due to these common areas.
When comparing a commercial space for lease, it’s critical to consider the total usable square footage you will occupy in relation to what you are paying rent on. This ratio can vary from building to building due to differences between Usable Square Feet (USF) and Rentable Square Feet (RSF). Because there is no industry standard of common area ratios among buildings, be sure to ask each landlord exactly how much space they factor into their calculations when renting a property. For more information regarding this topic, contact Point Acquisitions today!
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