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Understanding RSF in Commercial Real Estate: Key Insights

What is RSF in Commercial Real Estate?

In commercial real estate, RSF stands for Rentable Square Footage. It’s a critical metric that helps tenants and landlords define the space a tenant occupies, including areas shared with other tenants. RSF is more than just the tenant's individual office or retail space—it also accounts for shared areas like lobbies, hallways, restrooms, and stairwells.


Understanding RSF is essential for determining lease agreements and costs, as it directly impacts how much rent a tenant pays.


How is RSF Calculated?

RSF is calculated using the following formula:

RSF = Usable Square Footage (USF) + Common Area Factor (CAF)

  1. Usable Square Footage (USF): The actual space exclusively occupied by the tenant.

  2. Common Area Factor (CAF): A percentage of the shared areas that each tenant is responsible for. This factor is also known as the load factor or add-on factor.


For example, if your USF is 1,000 square feet and the CAF is 20%, the RSF would be:

1,000 sq. ft. + (1,000 sq. ft. × 0.20) = 1,200 RSF


Why is RSF Important in Leasing Agreements?

RSF plays a significant role in determining the cost of a commercial lease. Landlords use RSF to allocate the cost of maintaining shared areas among tenants fairly. Here's why it’s crucial:

  1. Fair Distribution of Costs: Ensures all tenants contribute proportionally to shared spaces.

  2. Transparency in Leases: Helps tenants understand what they’re paying for beyond their private space.

  3. Maximizing Efficiency: Tenants can compare properties based on RSF to find the most efficient use of their budget.


RSF vs. Usable Square Footage: Key Differences

The primary distinction between RSF and USF is the inclusion of shared spaces. While USF only considers the area a tenant directly occupies, RSF includes shared areas, making it a more comprehensive measure.

Example Comparison:

Metric

Definition

Example Value

Usable Square Footage (USF)

Tenant’s private area

1,000 sq. ft.

Rentable Square Footage (RSF)

USF plus shared spaces

1,200 sq. ft.

How to Negotiate RSF in a Lease

When negotiating a commercial lease, it’s important to understand how RSF is calculated. Here are a few tips:

  1. Request a Breakdown: Ask for the exact USF, RSF, and CAF percentages.

  2. Compare CAF Rates: Some properties may have a higher load factor due to larger shared spaces.

  3. Evaluate Value: Ensure the cost aligns with the amenities provided in the shared areas.


Conclusion

Rentable Square Footage (RSF) is a foundational concept in commercial real estate that determines lease costs and space allocation. By understanding RSF and how it’s calculated, tenants can make more informed decisions and negotiate fair lease terms.

Whether you're a first-time tenant or a seasoned business owner, having clarity about RSF can save you from unexpected costs and ensure you’re getting the best value for your investment.

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