03/08/2019
Renting an office space?
Having a thorough understanding of your lease terms is extremely helpful, if not crucial. It ensures that you maximize the value of your payment and effectively decide if the rates, terms, and availability of space in your chosen building would match your budget and timeline.
As a real estate specialist, KMC MAG Group's team has experienced dealing with several clients who needed assistance during the negotiation phase as they do not understand several terms and formulas and how to properly compute them.
In this article, we'll clarify some of the frequently misunderstood real estate terms by tenants, and sometimes, owners and landlords:
Net Leasable Area (NLA), Limited Common Area (LCA), and Gross Leasable Area (GLA)
Often, price negotiations take longer between tenants and landlords because of the definition of NLA, LCA, and GLA. Tenants would expect rental prices to be based on the measurements advertised in the brochures, which typically represents only the Net Leasable Area or Usable Area.
Net Leasable Area is the term used to determine which area of a floor or office suite can be occupied by the tenant, but it does not consider the Limited Common Area (LCA), covering the common lift lobbies, toilets, and hallways, etc.
Rental rates are based on the Gross Leasable Area (GLA), which is the sum of both the NLA and LCA for whole floor tenants. For non-whole floor tenants, GLA is computed by adding the unit's NLA to the percentage share on the common areas. This percentage share is based on the NLA per unit, thus for larger units, % share is higher than the other tenants with smaller units, even if they are on the same floor and they share the same common areas.
Example:
Unit Area (in sq m) %Share
Unit 1 160.23 18.80
Unit 4 124.16 14.56
Unit 1 has a higher percentage share because its NLA is 160.23 sq m.
Key takeaway:
When leasing an office space, make sure you clarify the size of the office space, including the common areas, so you can properly assess if the chosen location suits your organization's budget.
Renting an office space? Having a thorough understanding of your lease terms is extremely helpful, if not crucial. It ensures that you maximize the value of your payment and effectively decide if the rates, terms, and availability of space in your chosen building would match your budget and timeline...