A Fresh Take on CRE

Loss Factor v. Load Factor v. Add-On Factor - More on the "Rubber Ruler"


In Loss Factor Demystified and Loss Factor Demystified - Part 2 I explained what a Loss Factor is the difference between Rentable Area and Usable Area. Since that time I've had several people ask me about other terms they've heard thrown around - Load Factor, and Add-On Factor.

First off, Load Factor and Add-On Factor are the same thing. While loss factor tells you what percentage of the Rentable Area you can't use, Load Factor and Add-On Factor tell you how much larger the Rentable Area is than the Usable Area. For instance, let's say you are considering the rental of an office. The landlord tells you that the Rentable Area of the space is 10,000 SF, and the Usable Area of the space is 7,500 SF. What is your Loss Factor, and your Load Factor/Add-On Factor?

Loss Factor: (Rentable Area minus Usable Area) divided by Rentable Area: (10,000-7,500) = 2,500/10,000 = 25%

Load Factor/Add-On Factor: (Rentable Area minus Usable Area) divided by the Usable Area: (10,000-7,500) = 2,500/7,500 = 33%

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