Need help understanding Core/Load/Loss/Common Area Factor
I am trying to wrap my head around this. I understand usable vs rentable area.

Suppose there is a 100,000 SF multi-tenant office building. 15,000 of that is common areas (lobby, bathrooms, etc.)...so if I'm not mistaken:

Rentable Area: 100,000

Usable Area: 85,000

Common Areas: 15,000 

Core Factor: 15%



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So, say you want to lease 10,000 SF of this building. You would multiply 10,000 x 1.15 and pay for 11,500 SF of space?


How would this differ from the loss/load factor?


[{"id": "cy76yy0", "text": "You'd pay for the 10k space, but pay the owner cam charges for the common space I believe and its would be 10% of the total cam", "replies": [], "depth": 1}, {"id": "cy7dx8h", "text": "I may be mistaken but in my experience rentable is never equal to total SF of building. There are spaces in buildings that can't be leased like hallway between suites, bathrooms, lobby, etc. Your loss factor is % of total space that can't be rented. In your example 15% is loss factor and the most total space that can rented in 85k SF. CAM is to cover the tenants portion of the expenses of maintaining the common area, not the tenant paying their share of the market rent of the common area SF. \n\nFrom a landlords perspective, their Potential Revenue, the first line in valuation/underwriting, is based on the rentable SF, or total SF x (1-loss factor). ", "replies": [], "depth": 1}, {"id": "cypey6x", "text": "Core is not the only thing that affects Rentable vs Usable. Even though the building is multi-tenant, one tenant may occupy an entire floor, giving them more usable square footage than an alternate floor with multiple tenants. This is because of not only the Core but also on multi tenant floors the smaller tenants must meet certain architectural codes for fire exits which create additional hallways/corridors within the suite, which in turn reduces the overall usable. Additionally there could be an inefficient design of the overall building which prohibits maximization of the rentable suite. Lastly, the size of the space you lease is determined by your needs which can only truly be established by a space plan drawn by an architect. More to the point 10,000 SF in building A will be different than in Building B and C. Source-Tenant Rep", "replies": [{"id": "cypubet", "text": "Makes sense... Interesting point about the full floor tenant. I am currently in an office space taking up the entire floor - but building management still cleans our bathrooms and hallways. For my example, would the core factor of the building be 15%? OR do you calculate the core factor on a space-by-space basis?", "replies": [{"id": "cypwfjq", "text": "Typically core will be the same for every floor except on the floor the mechanical systems, its your load/loss that will change. Your floor would have lowest load/loss (these two terms are somewhat interchangeable; core is not) of all the other floors, so in your example of a 15% load/loss, then yes. Core refers to the main building components (Restrooms, Elevator Shafts, Stairwells). FWIW a building with a Core factor of 15% is a building that shouldn't have been built. Too much wasted space. Building management should always do that even if you were to lease the entire building, its part of the services you pay for in rent as a Tenant.", "replies": [{"id": "cyqkir3", "text": "Thank you for the thorough explanation. So when a Tenant is negotiating a lease, does the core factor even come into play? Or is it solely the load/loss factor that is discussed. ", "replies": [{"id": "cyqqbxi", "text": "You're welcome, I am having this exact conversation with one of my clients as we go through the site selection process. Generally speaking core &amp; load/loss isn't a deal term to be negotiated. As I briefly mentioned above, some buildings are more efficient than others in their design which will result in a smaller spread of rentable vs usable SF. Additionally on larger deals all of my clients have hired their own architects for space planning and part of that service is to produce an area calculation of the proposed premises. If that number is greatly different than the Landlord's advertised premises, then a separate field verification (an architect sends its team to physically measure the Premises based on BOMA Standards) will be conducted and the Landlord will elect to resolve the dispute OR we go to another building. In all honesty the area calculation rarely varies from the proposed premises as advertised as 99% of Landlords are not in the business of outright fraud. Back to your question though, when we are evaluating opportunities to lease office space efficiency of the space is one of the key elements in determining which buildings we choose to negotiate with, as opposed to something we negotiate on after touring.", "replies": [{"id": "cyqr5lp", "text": "&gt; Back to your question though, when we are evaluating opportunities to lease office space efficiency of the space is one of the key elements in determining which buildings we choose to negotiate with, as opposed to something we negotiate on after touring.\n\nWhy is this? Is it because you are trying to avoid paying for an excessive load/loss factor? For example, when your tenant leases a floor of an office, do they pay for the square footage that building support columns occupy?", "replies": [{"id": "cyqxy2z", "text": "better bang for your buck-if my tenant has 75 employees and their space program can fit into 25,000 SF in Building A but in a less efficient building needs to take 26,000 or 27,000 SF, that means not only does the tenant have to take more space which they're paying rent on it may be on a completely different floor which creates a whole new set of challenges. Yes the tenant pays for the building columns as they are part of the rentable SF", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]