What Does GLA Mean in Commercial Real Estate?

Gross Leasable Area (GLA) is a fundamental metric in commercial real estate, representing the total floor space within a property that is specifically designed for tenant occupancy. This measurement helps in understanding the income-generating potential of a commercial building. GLA serves as a consistent standard for evaluating property values and rental income, providing a clear picture for various stakeholders.

Defining Gross Leasable Area

Gross Leasable Area (GLA) precisely refers to the total floor area within a commercial building that is designated for a tenant’s exclusive use and from which rental income can be generated. This includes the entire floor space available for lease, encompassing areas like basements, mezzanines, and upper floors, provided they are intended for tenant occupancy.

Spaces commonly included in GLA are sales areas, private offices, storage rooms, and restrooms that are exclusively part of a tenant’s leased premises. For a retail tenant, this means their entire storefront, back-of-house storage, and any private office within their unit are counted. Similarly, in an office building, the tenant’s individual suites, private meeting rooms, and dedicated break areas contribute to the GLA. The underlying principle is to capture all square footage that directly contributes to the tenant’s business operations and revenue generation.

What is Excluded from GLA

While GLA focuses on income-generating space, certain areas within a commercial property are generally not included in its calculation. These typically involve common areas, structural elements, and shared facilities that benefit all occupants rather than being exclusively used by a single tenant. For instance, common hallways, stairwells, and elevator shafts are usually excluded from GLA. These spaces facilitate access and movement throughout the building for all tenants and visitors.

Public restrooms, mechanical rooms housing building systems, and utility closets are also excluded from GLA. These areas are necessary for the building’s operation and maintenance but do not directly generate rental income from individual tenants. Furthermore, shared amenities such as lobbies, atriums, and public seating areas, along with loading docks, are not typically counted in GLA.

Importance of GLA in Commercial Real Estate

Gross Leasable Area holds significant practical importance for various parties involved in commercial real estate transactions. For landlords, GLA is a primary determinant for setting rental rates, as lease agreements are frequently based on a per-square-foot charge of this area. It also provides a consistent metric for valuing properties, directly influencing potential income and overall asset assessment.

Tenants rely on GLA to understand the actual usable space they are leasing and to compare different properties effectively, ensuring they receive appropriate value for their investment. Investors analyze GLA to evaluate a property’s income potential and financial viability, often using it to project gross potential rent. For appraisers, GLA provides a standardized measure for consistent property valuation across the market. This consistent application of GLA facilitates transparent negotiations.

How GLA is Measured

The measurement of Gross Leasable Area follows established industry standards to ensure accuracy and consistency. While specific methodologies can vary slightly, they generally adhere to guidelines set by organizations like the Building Owners and Managers Association (BOMA). The process involves precise measurement of the floor area from the exterior face of outside walls and the centerline of interior walls that separate one tenant’s space from another or from common areas. This method allocates half of the shared wall thickness to each side.

Measurements often utilize architectural plans, which provide initial dimensions, and are verified with advanced tools like laser measuring devices for accuracy. Professional measurement services are frequently employed to ensure the precise determination of GLA, accounting for all included spaces such as mezzanines and basements designed for tenant use.