Over at the NAI Global blog they ask “does the actual space measurement really matter?” It’s a great question when you come at it from the contract side like they are. Important for understanding how much you should actually be paying.
It’s an even better question when looking across an entire portfolio. I get the question a lot about how space should be analyzed: usable square feet, rentable square feet, gross square feet. Invariably I answer: use the one where you have the most complete information. Usually that means you use the rentable number from your lease agreement. Very few companies also keep track of their usable square footage, let alone any variation on the theme.
The truly data focused will then ask if comparing two rentable numbers is fair seeing as different landlords, markets and building types will apply different load factors. It’s a fair question and in any other industry it would be valid. The problem is that square foot measures require an error factor to begin with.
Let’s say that you know you need 100 seats for an office. No more and no less. You even know exactly what your space standards fall: 182 square feet per seat. Now we know we need 18,200 square feet. But wait, every building in the market you are looking at has a 22,000 square foot floor plate. So guess what, you’re taking 22,000 square feet! You’ve already started with 20% more space than you need before you even get started and you have no choice in the matter because it’s a rare landlord that will let you lease only 18,200 sf of a 22,000 sf floor.
So in the end, does it really matter that you have a 10% or 20% difference across rent factors? Not really. For our purposes, we’re dealing with large numbers over many years. And the data elements with the most information are the ones that are most useful to us. Try not to get caught up in the measurement details. Start somewhere and evolve from there.