Common Area

This subject is has as many angles as your high school geometry class. Common area ina multi-tenanted office building is the space contained within the building that is outside of any tenant's premises and therefore, by definition "common" to all tenants. It can be expressed either as an "add-on factor" or a "loss factor". The former being added to the useable measured space and the latter being deducted from the grossed-up "rentable area". "Rentable area" is the quantity of space upon which your rent is calculated. There have been real estate industry organizations,like BOMA (Building Owners and Managers Association), that have established definitions that exclude "vertical penetrations", which would mean stairwells, shafts and elevators, to attempt to level the playing field between buildings, but the real problem is that virtually no tenant would ever attempt to disprove the claim of a landlord concerning his common area. The reason being, one would have to measure the entire building and all of the various components to determine the common area.

Let me give you an example to clarify: Suppose you wish to rent 1,000 square feet of space in a multi-tenanted office building. The space may measure 1,000 square feet, but because the building has a 15% add-on factor for common area, you will be paying for 1,150 square feet of space. Within the common area in the building will be the lobbies, hallways, bathrooms, utility closets and mechanical rooms. These areas are all necessary for the operation of the building and there combined space is distributed among the tenants in the building.

Now comes the twists and turns of "common area". What happens when a floor in a multi-tenanted building has only one tenant and therefore, no hallway space? Or, what if additional corridor space needs to be created in order to accommodate an additional tenant on a particular floor? Another area of contention is the actual measurement of the space. In the office leasing business, space is measure from the inside of the window to the outside of the corridor wall and from the center of all demising walls, (defined as walls that separate two leased premises). Physically, in order to measure that space accurately, it would have to be totally without interior walls, a condition normally found only in new buildings or where complete interior demolition has occurred. Reliance on measurements from plans is not considered industry standard practice unless the plans are actual "as-built" plans meaning that they have reflect the measurements of the space after the building was constructed.

From a practical matter, "common area" should be taken in context. By that I mean, that the space you are renting of 1,000 square feet, like the example above, at a rental rate of say $20.00 per square foot, (gross, full service) will cost you $23,000 per year, not $20,000 per year. If you cant afford the $23,000 you need to consider leasing less space or finding a building that charges a lower rental rate. Can you find a building that doesn't charge for common area? Yes, there are some rare examples, but then you will have to pay for common area maintenance (CAM), so it works out to virtually the same thing. If you rented space in a one story building that had separate entrances for each tenant and separate bathrooms for each tenant, you would not be paying for common area, but you would be paying for the space for your vestibule entrance and for your bathrooms. Do some buildings charge more for common area then others? Yes, generally because they have more generous common areas which typically denotes a higher quality building.

My best advice is to shop around and once you see what's available and what best suits your needs, then you can determine in specific cases whether the common area is in line with the rest of the market or if not, if it worth the extra cost to you?

Don't hesitate to contact me if you have any questions on common area.

Comments

[Mission Valley Office Space]

A great working environment with a common area can really do a lot to improve employee morale, and provide a more comfortable place for meeting with clients. Also, some building companies provide lots of features besides space. They sometimes offer a receptionist, mail service, and office equipment and then tailor all their services around your specific needs.

[Randy Eigen]

Thanks for your comment. That sounds more like shared services then a multi-tenanted office building. Shared services certainly serve a great purpose but it generally comes at a price that becomes a bit steep once a company gets beyond three employess and can predict their future growth over a three year period.