What is a Load Factor in Commercial Real Estate?
In commercial real estate, the load factor is a measure of how efficiently a building is being used. It is calculated by dividing the total rentable square footage of a building by the total usable square footage of a building. The resulting percentage represents the proportion of the building's total floor space that is being leased or occupied by tenants.
For example, if a building has a total of 100,000 square feet of rentable space and 50,000 square feet of usable space, the load factor would be 50%. This would mean that half of the building's total floor space is being occupied by tenants.
The load factor can be used by landlords to determine the profitability of a building and by tenants to compare the price and value of different properties. A higher load factor may indicate that a building is more fully leased and therefore more profitable, while a lower load factor may indicate that a building has more available space and may be less expensive to rent.