Loss Factor

Load Factor in Commercial Real Estate

Load Factor in Commercial Real Estate

A load factor, also known as a loss factor, is a metric that compares the amount of space a tenant has to pay for in a commercial lease, versus the amount of space they can actually use. The load factor or a commercial lease can be calculated with the formula below: 

Rentable Square Feet/Usable Square Feet = Load Factor 

Load factor is important because tenants in commercial leases, especially leases for office buildings or large retail developments like malls, typically have to pay for their percentage of a building's common areas.