CRE glossary
Load factor
Load factor (also called add-on factor or core factor) is the ratio of common-area square feet allocated to the tenant on top of usable square feet. It's expressed as a percentage and ranges from 8% in modern efficient towers to 25%+ in older or oddly shaped buildings. Higher load factors mean the tenant pays for more common space they don't directly use.
The load factor exists because every floor has shared elements: corridors, restrooms, elevator lobbies, mechanical rooms, electrical closets. These are common to all tenants on the floor, but rent has to be paid by someone. Buildings allocate them pro-rata based on each tenant's USF, and that allocation IS the load factor.
Two components contribute. First: floor common area (corridors, lobbies, restrooms, typically 8–12% on a multi-tenant floor). Second: building common area (main lobby, fitness center, conference center, typically 4–8% additional). Summed together, the typical Class A office load factor is 12–18%.
Single-tenant floors can have lower load factors (no corridor requirement), but most office tenants occupy partial floors. Multi-tenant load factors compound the issue, every square foot of corridor that connects three tenants gets allocated to all three. Tenants on partial floors pay for 'their' share of common area whether they use it or not.
Load factor
Load factor = (RSF − USF) ÷ USF × 100%
Example
- Building A: 8% load factor
- Modern efficient tower
- Building B: 16% load factor
- Standard Class A
- Building C: 24% load factor
- Older / poorly designed
- $60/SF in C = $74.40/USF
- vs $65/SF in A = $70.20/USF
- Winner on $/USF
- Building A despite higher headline
Broker perspective
Always ask for the BOMA measurement when shopping a building. A 22% load factor is a red flag, either the building is poorly laid out, or the measurement is gamed in the landlord's favor. Compare load factors across competing buildings and back into $/USF, the real comparison metric.
Frequently asked
People also ask
Can I negotiate the load factor?
No, it's a building-level measurement. But you can negotiate base rent down to compensate for a high load factor.
What's a 'reasonable' load factor?
Class A: 12–18%. Modern tier-1: 8–12%. Older / inefficient: 18%+. Above 22% is a red flag.
Where does the load factor come from?
BOMA measurement standards. Reputable buildings get re-measured every 5–10 years; older buildings can have legacy errors.
Are load factors gamed?
Sometimes. Landlords can assign more common-area square footage to certain floors. If load factor differs significantly across floors in the same building, push back.
Related terms
Rentable vs usable square feet (RSF / USF)
USF is the floor area you can actually use; RSF adds your share of common areas. The ratio between them is the load factor.
Base rent
The headline rent before pass-through expenses, usually quoted in $/SF/year and the starting point for every comp.
Effective rent
Present-valued average rent over the term, net of free rent and TI, the real apples-to-apples cost number.
See load factor extracted from a real lease.
Drop a 60-page lease, get a 38-field abstract in 90 seconds, every value cited back to the source page.