How are office rental rates typically calculated?

Office rental rates are typically calculated on a per square foot basis for the rentable area. This method encompasses all areas that a tenant can utilize, which includes not only the usable space within the office itself but also a proportionate share of common areas, such as hallways, lobbies, and shared facilities.

Rentable area calculation includes the actual floor space tenants occupy and the allocated share of common spaces, thus providing a more accurate reflection of the true cost of leasing the space. This approach helps landlords ensure they are covering all costs associated with maintaining the building and provides transparency for tenants in understanding the full extent of their rental expenses.

Calculating rental rates per usable area alone does not account for the shared facilities and common space, which is why it often isn't the preferred metric. Other methods, like flat monthly rates, are less common for commercial leases since they don't provide the granularity needed for landlords and tenants to assess costs accurately based on space utilization.