difterm.com Gross Leaseable Area (GLA) refers to the total floor space available for rent, including common areas such as lobbies, hallways, and restrooms, while Net Leaseable Area (NLA) represents only the usable space tenants occupy. Understanding the difference between GLA and NLA is crucial for accurate rent calculations and space planning in commercial real estate. Investors and landlords use these metrics to evaluate property value, optimize leasing strategies, and maximize rental income.
Table of Comparison
| Criteria | Gross Leaseable Area (GLA) | Net Leaseable Area (NLA) |
|---|---|---|
| Definition | Total floor area available for leasing, including common areas. | Usable floor area leased exclusively to tenants, excluding common, structural, and service areas. |
| Measurement Inclusion | Includes corridors, lobbies, restrooms, and other shared spaces. | Excludes shared spaces; focuses on tenant-occupied space. |
| Purpose | Used to assess total rentable property size. | Used for calculating rent based on actual tenant space. |
| Impact on Leasing | Provides broad overview of leasable property. | Determines effective rentable area for tenant billing. |
| Typical Usage | Retail centers, malls, multi-tenant properties. | Office spaces, industrial units, tenant-specific calculations. |
Understanding Gross Leaseable Area (GLA) in Commercial Real Estate
Gross Leaseable Area (GLA) in commercial real estate refers to the total floor area designed for tenant occupancy and exclusive use, including all tenant spaces, common areas, and service spaces. Unlike Net Leaseable Area (NLA), which excludes common areas and focuses solely on usable tenant space, GLA provides a complete measure of a property's revenue-generating potential. Accurate understanding of GLA is essential for property valuation, leasing negotiations, and calculating rental rates in retail and office properties.
Defining Net Leaseable Area (NLA) and Its Importance
Net Leaseable Area (NLA) represents the actual usable space available to tenants within a commercial property, excluding common areas like lobbies, hallways, and restrooms. NLA is crucial for accurate rental rate calculations and lease agreements, ensuring tenants pay only for the space they occupy. Understanding NLA helps investors and property managers optimize tenant layout and maximize revenue per square foot.
Key Differences Between GLA and NLA
Gross leaseable area (GLA) refers to the total floor area designed for tenant occupancy, including common spaces such as hallways and lobbies, while net leaseable area (NLA) only accounts for the actual usable space within a tenant's premises. GLA is crucial for evaluating the overall capacity and revenue potential of a retail or commercial property, whereas NLA is used to determine precise rent calculations and tenant usable space. Understanding the distinction between GLA and NLA aids landlords and tenants in negotiating leases and assessing financial commitments accurately.
How GLA and NLA Impact Property Valuation
Gross Leasable Area (GLA) represents the total floor area available for tenant occupancy, including common spaces, while Net Leasable Area (NLA) measures only the actual rentable space excluding shared areas. Property valuation heavily depends on NLA as it directly correlates with rental income potential, whereas GLA influences operating expenses and overall property management costs. Accurate differentiation between GLA and NLA enables investors to assess revenue generation, vacancy rates, and maintenance obligations, ultimately affecting market value and investment returns.
Calculating GLA: Methods and Standards
Calculating Gross Leaseable Area (GLA) involves summing the total floor area designed for tenant occupancy and exclusive use, including basements, mezzanines, and upper floors as per BOMA (Building Owners and Managers Association) standards. GLA differs from Net Leaseable Area (NLA), which excludes common areas such as lobbies, hallways, and restrooms. Accurate GLA measurement requires adherence to standardized methods, such as BOMA 2017, to ensure consistent tenant billing and property valuation.
Calculating NLA: Step-by-Step Guide
Calculating Net Leaseable Area (NLA) involves subtracting common areas, such as corridors, lobbies, and shared restrooms, from the Gross Leaseable Area (GLA). Accurate measurement requires detailed floor plans and an understanding of which spaces are allocatable to tenants versus non-leasable. Utilizing industry standards like BOMA (Building Owners and Managers Association) guidelines ensures consistent and precise NLA calculations for leasing and property valuation.
GLA vs NLA: Implications for Lease Agreements
Gross Leaseable Area (GLA) measures the total floor area available for leasing in a property, including common areas, while Net Leaseable Area (NLA) represents the actual usable space exclusive of communal zones. Understanding the distinction between GLA and NLA is crucial for lease agreements as it directly affects rental calculations, tenant obligations, and operational costs. Precise measurement of NLA ensures fair tenant billing and space utilization, whereas GLA influences overall property valuation and marketing strategies.
GLA and NLA in Retail Space Planning
Gross Leaseable Area (GLA) in retail space planning refers to the total floor area designed for tenant occupancy and exclusive use, including all common areas such as lobbies and hallways within the leased premises. Net Leaseable Area (NLA) excludes these common spaces, measuring only the actual usable area by the tenant, which directly impacts rental calculations and space efficiency evaluations. Retail developers prioritize GLA to assess overall property size and potential income, while NLA guides tenant lease negotiations and optimization of retail layouts.
Impact of GLA vs NLA on Investment Decisions
Gross Leaseable Area (GLA) measures the total floor area available for leasing, including common areas and structural elements, providing a broad overview of a property's size. Net Leaseable Area (NLA) represents the actual usable space tenants can occupy, directly influencing rental income potential and tenant satisfaction. Investors prioritize NLA over GLA for precise cash flow projections and property valuation, as NLA more accurately reflects income-generating space and operational efficiency.
Industry Best Practices for Reporting GLA and NLA
Industry best practices for reporting Gross Leaseable Area (GLA) and Net Leaseable Area (NLA) emphasize precise measurement standards to ensure transparency and consistency. GLA includes all tenant-usable spaces plus shared common areas such as lobbies and corridors, while NLA strictly accounts for rentable tenant space excluding common areas. Accurate differentiation between GLA and NLA supports effective leasing strategies, valuation, and compliance with commercial real estate regulatory frameworks.
Gross leaseable area (GLA) vs Net leaseable area (NLA) Infographic
