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What is GLA – Gross Leasable Area in Commercial Real Estate

Author Lisa Stern Read bio
Tags: gla gross leasable area
Date: September 30, 2021

Landlords usually charge rent and state the square footage of office buildings based upon the “gross leasable area” of the whole office building and of the tenant’s leased space.  

Because of that, Gross Leasable Floor Area can sometimes cause difficulties for tenants, as they may think that their space actually contains those measurements.

Gross leasable area, or GLA, is the amount of space in a commercial building that can actually be rented by a tenant.

In reality, the gross leasable area of a building includes all the common areas, elevators, common bathrooms, stairwells, and other portions of the building that the tenant doesn’t occupy (regularly).  

The actual square footage of the tenant’s space is called the Net Rentable Area of the building. 

What Is GLA, Or Gross Leasable Area?

A term used to describe the floor area available for the exclusive use of a retail tenant in retail leasing is – GLA or Gross leasable area.

The gross leasable area definition says that this leasable area is generally measured to the outside face of exterior walls and the centerline of demising walls separating tenants. 

The total enclosed floor area is designed for the use of one retail occupant, and it including basements, mezzanines, and upper floors. 

The bank of New York

Gross Leasable Area Vs. The Amount Of Net Rentable Space

Almost without exception, the gross leasable area of a tenant’s space is larger than the actual physical measurements of the space.  

Thus, that 5,000 sq. ft. office space you’ve been looking to lease – is not, in fact, 5,000 sq. ft.  Rather it’s more around 4,300, or 4,500, or 4,700 – depending on the particular building and the amount of non-rentable space that’s being included in the estimates

I’ve seen tenants do drawings of their floorplans to see how their company is going to fit into a space. And they are often surprised.

When you are budgeting for your new office space, be sure to take into account the difference between the gross leasable area of your space and the net rentable area.

Gross Leasable Area or Net Leasable Area?

Is the tenant required to pay the rent on the basis of Gross Leasable Area or Net Leasable Area?

In the vast majority of cases, the tenant will have to GLA pay based upon the gross leasable area of the building.  

It does not have so much to do with whether you want to pay for your share of the common area, rather with how pricing models have developed over the years, decades now.  

If you want to lease a space, the pricing is based on the gross leasable area, and you simply aren’t going to be able to lease space from the landlord. They also have models in which they calculate their return on investment on a given property.

As investors, they require that minimum return to invest in a commercial real estate asset. If they gave the tenants rents based upon the net rentable area – they would simply adjust the per square foot rents upward, and meet their target ROIs.

So, yes, in most cases, you as a tenant will be paying your rent based on Gross Leasable Area because you are responsible for a portion of the common area.

Wall Street sign

GLA And Gross Potential Rent

Since it’s common in commercial real estate to calculate rent per square foot, investors can use the Gross Leasable Area to calculate Gross Potential Net (GPR).

For example…

If the annual market rent for a certain building is estimated at $10/sq. ft., and the building’s GLA is 20,000 sq. ft., then the annual GPR of the building would be $200,000.

However, since buildings are rarely at 100% occupancy, most make significantly less.

BOMA Standards – How Gross Leasable Area is Measured

Before you make any significant leasable area calculations using a building’s GLA, you’ll want to make sure that you’re working with accurate information.

Typically, what’s used to regulate and calculate gross leasable area are the BOMA, or Building Owners and Managers Association measures.

BOMA is the most widely accepted set of standards for measuring commercial buildings, including office buildings, multifamily assets, and retail spaces. 

Therefore, for specific questions about how a part of a building may be included in its gross leasable area, consult IPG for more information. To learn more about commercial real estate leases, speak with an IPG specialist today.