What Does RBA Stand For in Real Estate?

The commercial real estate landscape involves a variety of specialized terms that can be perplexing. Rentable Building Area (RBA) is a fundamental concept that directly influences leasing costs and property valuations. It often causes confusion due to its nuanced definition and calculation methods. This article clarifies what RBA represents and how it is applied in practical real estate scenarios.

Definition of Rentable Building Area

Rentable Building Area (RBA) refers to the total space within a commercial property for which a tenant typically pays rent. It encompasses both the tenant’s private, usable area and a proportionate share of the building’s common areas shared with other tenants.

The usable area is the specific space within a suite or floor that a tenant occupies to conduct their business, such as offices, conference rooms, or individual restrooms within their leased premises. Common areas include building lobbies, shared corridors, restrooms accessible to multiple tenants, and other amenities like fitness centers or cafeterias. These spaces are essential for the building’s functionality. Mechanical rooms and elevator shafts can also contribute to the overall RBA, as they serve the entire building’s infrastructure.

Industry standards play a significant role in defining and measuring RBA. The Building Owners and Managers Association International (BOMA) provides widely recognized standards for measuring commercial buildings. While BOMA outlines detailed methodologies, its core purpose is to provide a systematic and repeatable approach for determining rentable area, ensuring consistency across properties.

Calculation and Application of RBA

The practical calculation of Rentable Building Area involves a concept known as the “load factor” or “common area factor.” This factor is a multiplier applied to a tenant’s usable area to account for their share of the building’s common spaces.

To determine a building’s load factor, the total rentable square footage of the building is divided by its total usable square footage. For instance, if a building has 120,000 rentable square feet and 100,000 usable square feet, the load factor would be 1.20. This means that for every square foot of usable space, an additional 0.20 square feet of common area is allocated, reflecting a 20% addition for shared spaces.

Once the load factor is established, a tenant’s RBA is calculated by multiplying their usable square footage by this load factor. For example, a tenant occupying 5,000 usable square feet in a building with a 1.20 load factor would have a Rentable Building Area of 6,000 square feet (5,000 SF x 1.20). This calculated RBA is the figure used to determine the tenant’s total rent payments.

RBA serves as the primary basis for calculating rent in commercial leases, typically expressed as a rate per square foot of RBA (e.g., “$X per square foot RBA per year”). This metric allows landlords to recover the costs associated with maintaining and operating common areas. It also plays an important role in property valuation and appraisal, as potential rental income is directly tied to the total rentable area of a building.

RBA enables landlords and tenants to compare different properties on a standardized basis. By understanding the RBA and the associated load factor, tenants can evaluate the true cost of space across various buildings, even if their usable areas differ. This transparency helps in making informed leasing decisions, ensuring tenants pay a fair amount for both their private space and their share of the building’s shared amenities.