Space is not the final frontier for negotiations between landlord and tenant. However, square feet should be specified in all commercial leases.
Questions to Ask
There are several questions for a tenant to seek answers and landlord should be ready to address. What is the minimum square feet the tenant requires? What amount of space is the landlord leasing? How many leasable square feet will tenant be charged rent? Is leasable space treated the same as space tenant exclusively occupies? What is the standard of measurement used to determine useable space and leasable space? What if landlord and tenant agree on the number of square feet to use in the lease and it is later discovered that the leasable square footage or useable square footage is inaccurate?
Useable Space vs. Leasable Space
Useable space may be defined as space tenant can use to the exclusion of all others and is not a common space or excluded by agreement in the lease. Leasable space or rentable square feet includes useable space plus a portion of other space in a building used for hallways, common conference room space, common rest rooms, and elevators and staircases none of which are for the exclusive use of tenant.
How to Measure Square Feet
The devil is in the details. Unless tenant agreed to lease space because of its location, the measurement to determine the amount of square feet is vital.
In measuring square feet, obtaining accuracy based on an agreed standard (the BOMA standard), affects landlord and tenant. Using a business whose service includes measuring square footage may be helpful particularly when both landlord and tenant agree to the party who will perform the measurement. Landlord will have an estimated square footage in mind. Is the landlord correct? Is the standard used to obtain the lease space measurements based on an outdated or inappropriate standard? Did the person measuring the space use a method more appropriate for office space or for warehouse space?
Be aware, using an independent measuring service isn’t always the gold standard. More than once, I have witnessed a tenant agreeing to be bound by a number correctly calculated that became more square footage than landlord’s estimated square feet. As a result the tenant paid more rent and sales tax.
Landlord and tenant could agree to a due diligence period in a pre-lease agreement allowing tenant to measure the space to determine the useable space and leasable square footage. If tenant signs the lease before the measurements are determined, landlord would want the lease to say tenant had the opportunity to measure the lease space, tenant declined to do so, the square feet specified in the lease is assumed to be correct and will not be re-determined.
If you need help reviewing or negotiating a commercial lease, contact our Florida real estate attorneys at 813-852-6500 for a free 30-minute consultation.