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Commercial real estate is almost always leased based on the square foot. When determining the amount of square feet to be included in the lease calculations, most landlords use what is known as the “rentable area” or “gross leasable area,” which, depending on whether the real estate use is office, retail or industrial, usually includes more square footage than the tenant actually occupies. The method used to determine the square feet directly affects the amount of rent to be paid, and is therefore of paramount importance when entering into a lease. Establishing and understanding the standard for measuring rentable space is a foundation needed when negotiating commercial real estate leases. This article briefly describes the methods used to measure the rentable area for office, retail and industrial leases and suggests sample lease language for both landlords and tenants.
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