How can you figure out how much loss factor you’re signing up for when you are scouting commercial real estate? To answer that question, we must first define Rentable Square Footage (RSF) and Usable Square Footage (USF).
Commercial brokers and landlords will use two different numbers to describe the size of a space: Rentable Square Foot (RSF) and Usable Square Foot (USF).
Mathematically, loss factor equals “the percentage difference between rentable area and usable area.” In other words, you can calculate loss factor by dividing the difference between the Rentable Square Footage (RSF) and the Usable Square Footage (USF) by the RSF.
Let’s go back to our example from the first paragraph and use the loss factor calculation formula do the math in three easy steps:
First, find the two essential numbers: Rentable Square Feet and Usable Square Feet.
Second, subtract the Usable Square Footage from the Rentable Square Footage.
Third, divide the difference by the Rentable Square Footage.