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Question: The Lessee (Tenant) asked why do I also pay rent for the common area instead of just CAM charges?

Answer: The base rent charged for the office suites in the building is a reflection of the Lessors' (Landlord) desired return on and of his investment in the building. In many cases, the Lessor’s investment in the common areas is greater than in the leased office suites. Common areas typically include fully handicapped bathrooms, elevators, fire/life safety elements, and many times above standard finishes. All of this adds to the overall cost of the building and must be included when calculating his return on investment.

Rentable vs. Usable: This is an area that always comes up when calculating the cost of office space. Usable square feet are the interior premises of the office suite that one actually occupies. The rentable area is the sum of the usable square feet and the percentage of the common areas of the building. Clients and guests must utilize the common areas to gain access to the office suite, use the bathrooms, elevators, etc. Consequently, a percentage of the common area is allocated to each usable square foot of space in the building. One thing to be aware of as a Tenant is that the ratio of common area to usable area in a well-designed building will be between 11% to 15% of the total square footage (gross building area). When this percentage begins to approach 18% to 20% we term this an inefficient design that adds too much common area to the usable calculation and rent to the cost.

The FAQ is brought to you by our expert Commercial Real Estate Agents at NAI Landmark. Special Thanks to Steve Olson, Broker. Contact Steve directly at 406- 556-5074, by fax at 406 556-5006, or by email at steve.olson@nailandmark.com.