Loss factor

In commercial real estate in the USA, a building's loss factor is the percentage of the building's area shared by tenants or space that are dedicated to the common areas of a building used to calculate the difference between the net (usable) and gross (billable) areas.[1]

That portion of the space is considered "lost" because it cannot be directly leased and the maintenance and operation costs must be covered by the other rentable areas.[2]

The loss factor is often confused with load factor, but the formulas for each term vary.[3]

The loss factor is calculated as follows:

Loss Factor = (Rentable Area – Usable Area) / Rentable Area

The Building Owners and Managers Association has established a standard with American National Standards Institute, ANSI/BOMA Z65.1-2010 for measuring floor area and calculating gross leasable area and loss factor.[4]

References

  1. ↑ Real Estate Investment and Finance. Arnold, Maryland: Building Owners and Managers Association. pp. G16.
  2. ↑ "How is loss factor calculated?...and more questions answered". The Real Deal online. Korangy Publishing Inc. Retrieved 5 December 2011.
  3. ↑ "Glossary of Square Footage Terms". Building Area Measurement LLC. Retrieved 13 May 2013.
  4. ↑ Office Buildings: Standard Methods of Measurement (ANSI/BOMA Z65.1 – 2010). Arnold, Maryland: Building Owners and Managers Association, American National Standards Institute. 2010.