Introduction
In the world of real estate, there are various terms and acronyms that can be confusing for those unfamiliar with the industry. One such term is GLA, which stands for Gross Leasable Area. GLA is an important concept in real estate, especially for commercial properties, as it helps determine the rentable space and potential income for a property. In this article, we will dive deeper into what GLA is and how it is calculated.
What is GLA?
Gross Leasable Area (GLA) refers to the total floor area of a building that can be rented out to tenants. It includes all the space that is available for lease, including both occupied and unoccupied areas. GLA is typically measured in square feet or square meters, depending on the country’s standard unit of measurement.
Calculating GLA
To calculate the GLA of a building, several factors need to be considered. The first step is to measure the floor area of each individual space within the building. This includes all the tenant spaces, common areas, and any other areas that can be leased. Once the measurements are obtained, they are added together to determine the total GLA of the building.
It is important to note that certain areas are excluded from the GLA calculation. These typically include areas such as stairwells, elevators, mechanical rooms, and other spaces that are not rentable to tenants. The purpose of excluding these areas is to provide an accurate representation of the leasable space within the building.
Importance of GLA
GLA is a crucial metric in real estate, especially for commercial properties. It helps determine the potential income that can be generated from a property by calculating the rentable space. The higher the GLA, the more space available for lease, which can lead to higher rental income for property owners.
Additionally, GLA is used by investors, lenders, and appraisers to evaluate the value and profitability of a property. It provides a standardized measurement that allows for easy comparison between different properties. GLA is often used in conjunction with other metrics, such as occupancy rates and rental rates, to assess the financial performance of a property.
GLA and Common Area Maintenance (CAM) Charges
In commercial leases, tenants are often responsible for paying a portion of the building’s operating expenses, known as Common Area Maintenance (CAM) charges. These charges cover the costs of maintaining and operating the common areas of the building, such as hallways, parking lots, and landscaping.
When calculating CAM charges, GLA is used to determine each tenant’s proportionate share of the expenses. The tenant’s share is typically based on the percentage of the total GLA that their leased space represents. For example, if a tenant leases 1,000 square feet in a building with a total GLA of 10,000 square feet, they would be responsible for 10% of the CAM charges.
Conclusion
Gross Leasable Area (GLA) is an essential concept in real estate, particularly for commercial properties. It represents the total floor area of a building that can be leased to tenants and is used to calculate potential rental income and evaluate the value of a property. Understanding GLA is crucial for property owners, investors, and tenants alike, as it provides a standardized measurement for assessing the leasable space within a building.
References
– Investopedia: www.investopedia.com/terms/g/gross-leasable-area-gla.asp
– The Balance Small Business: www.thebalancesmb.com/gross-leasable-area-gla-in-commercial-real-estate-2866723
– Commercial Real Estate Glossary: www.commercialrealestate.loans/commercial-real-estate-glossary/gross-leasable-area-gla
