Net Leasable Area

Definition of "Net leasable area"

Written by

Ruby Lombardo

Jack Pedersen Realty

The net leasable area is all the leasable area of a given building exclusive of non-leasable space such as hallways, building foyers, rooms devoted to heating, air conditioning, elevators, and other utility areas. The net leasable area produces the lease income economically supporting the building. For example, a structure having 5,000 sq. ft. of a site may have a net leasable area of 4,250 sq. ft.

The meaning of net leasable area defines the room within a leased building’s unit that a renter can, in fact, use. Thus, the definition of a net leasable area excludes, by default, utility rooms and outside walls, which the given unit does not contain. Still, it incorporates upper floors, balconies, storage units, and basements. Tenants can also utilize other floor areas.

Gross leasable area vs. net leasable area

Suppose you’re interested in leasing an office space. Then, you have to know that landlords generally establish the rent rate on the net leasable area. In this regard, office space is different from leasing a retail unit. Also, note that landlords will not count out your lease based on gross leasable area. 

What does gross leasable area mean? Commercial tenants can entirely and solely use the entire gross leasable area. Additionally, they can fully utilize standard units where they don’t genuinely reside or work, such as lifts, restrooms, flights of stairs, etc.

Don’t get your hopes high just yet! You’ll still have to cover commonly-used area costs as an office tenant.

Maintenance services on a net leasable area

Business proprietors do not utilize the net leasable area daily. Moreover, a leased unit does not include most of the net locations. Why do renters still pay for them, then? At a particular moment, everyone (executives, workforce, clients, and customers) will use these spaces, even for a brief activity or passing by.

As you would imagine, these “public spaces” require maintenance and various services. No buildings can operate without plumbing, lighting, cleaning, electricity, or gardening services. The building investors will not cover this substantial amount of money. Instead, tenants will have to pay for them. 

Finding an ideal space to rent isn’t easy. Are you looking for a low-priced office, retail, or other rental? Then, give local real estate agents a shout-out for the fairest offers on the rental market!