Load Factor
The ratio between rentable and usable square footage in a commercial property, representing the tenant's share of common areas.
Definition
Load factor (also called common area factor or add-on factor) is the multiplier applied to usable square footage to calculate rentable square footage. It accounts for a tenant's proportional share of common areas like lobbies, hallways, restrooms, and mechanical rooms. A load factor of 1.15 means for every 1,000 usable square feet, you pay rent on 1,150 rentable square feet. In small bay industrial and flex properties, load factors are typically lower (1.05-1.10) than office buildings because units are often self-contained with direct exterior access and private restrooms. Multi-tenant buildings with shared corridors or common restrooms will have higher load factors.
Formula
Load Factor = Rentable Square Feet / Usable Square FeetExample
A tenant tours a 2,000 USF unit in a multi-tenant flex building. The building has a 1.08 load factor. Rentable SF = 2,000 × 1.08 = 2,160 RSF. At $14/RSF, monthly rent is $2,520 rather than $2,333 if calculated on usable space alone.