Gross Leasable Area
GLA: Gross Leasable Area
Gross leasable area, often shortened to GLA, is the designated floor area in a commercial property that is for the exclusive use of a tenant. Gross leasable area typically includes mezzanines, basements, and upper floors, but excludes shared areas, such as elevators, loading docks, vault rooms, public bathrooms or maintenance/utility areas.
How is Gross Leasable Area Measured?
It is standard practice for gross leasable area to be measured from the centerline of the walls separating tenants, and from the outside face of exterior walls. Internal walls, columns, and other support structures (but not those shared with other tenants) are typically incorporated into GLA.
GLA Measurement Standards are Determined by BOMA
The Building Owners and Managers Association, also known as BOMA, is an internationally recognized organization that sets fair standards for how commercial and industrial buildings are to be measured. The accuracy of any estimation of a building’s GLA should always be checked against the most current iteration of BOMA’s standards, which can be found here on their website.
Gross Leasable Area and Gross Potential Rent
Gross potential rent (GPR) is an estimation of the potential rent that a commercial or multifamily property can generate. The metric is usually representative of the potential rent on an annual basis. Since most properties are rented on a PSF (per square foot) basis, gross leasable area can be utilized to determine a building’s estimated GPR. In other words, if a building with a GLA of 5,000 sq. ft., was renting for $20/PSF, that property would have a GPR of $100,000 (5,000 x 20 = 100,000). The gross potential rent metric is only for estimation purposes and is in no way a completely accurate calculation of what a building will actually make in revenue, however, since building occupancy almost never reaches 100%.
Related Questions
What is the difference between gross leasable area and rentable area?
Gross leasable area (GLA) is the amount of space in a commercial building that can actually be rented by a tenant. This includes basements, mezzanines, or upper floors that a tenant can potentially utilize. Gross leasable area typically includes mezzanines, basements, and upper floors, but excludes shared areas, such as elevators, loading docks, vault rooms, public bathrooms or maintenance/utility areas.
Rentable area is the total area of a building that is available for rent. This includes the gross leasable area, as well as any common areas that are shared by tenants. Common areas include hallways, lobbies, elevators, and other shared spaces. Rentable area is usually calculated by multiplying the gross leasable area by a factor that takes into account the common areas.
How is gross leasable area calculated?
Gross leasable area is typically measured from the centerline of the walls separating tenants, and from the outside face of exterior walls. Internal walls, columns, and other support structures (but not those shared with other tenants) are typically incorporated into GLA.
You can also use a property's GLA to calculate the gross potential rent (GPR) of the property. For example, if the annual market rent for a certain building is estimated at $10/square foot, and the building's GLA is 20,000 square feet, then the annual GPR of the building would be $200,000.
However, it's important to remember that GPR is the most a project could make in rent. And, since buildings are rarely at 100% occupancy, most make significantly less. Therefore, if you plan to acquire commercial real estate, it may be more effective to look at the building's rent roll (a record of all current leases and rental income), and its trailing twelve months (TTM) or trailing three months (T3) financial metrics.
What is the average gross leasable area for an apartment building?
The average gross leasable area for an apartment building varies depending on the size and type of the building. According to Apartment Loans, gross leasable area is usually representative of the potential rent on an annual basis. Since most properties are rented on a PSF (per square foot) basis, gross leasable area can be utilized to determine a building’s estimated GPR (Gross Potential Rent).
According to Multifamily Loans, the gross leasable area definition is the amount of space in a commercial building that can actually be rented by a tenant. This includes basements, mezzanines, or upper floors that a tenant can potentially utilize.
According to Commercial Real Estate Loans, GLA is typically measured from the center of a wall or other partition that separates tenants from the lease line in common areas. It also fully takes into account any walls that are not shared with other tenants.
What are the benefits of having a higher gross leasable area?
The benefits of having a higher gross leasable area include increased rental income potential, as well as the ability to attract more tenants. With a larger GLA, landlords can offer more space to tenants, which can lead to higher rental rates. Additionally, a larger GLA can also provide more flexibility in terms of tenant mix, allowing landlords to offer a variety of different types of tenants, such as retail, office, or residential. This can help to diversify the tenant base and reduce the risk of vacancy.
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What are the risks associated with having a lower gross leasable area?
Having a lower gross leasable area can lead to lower potential rent, which can be a risk for commercial and multifamily properties. Lower potential rent can lead to lower occupancy rates, which can lead to lower revenue for the property. Additionally, lower potential rent can make it more difficult to attract tenants, as they may be looking for properties with higher potential rent.
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