Gross Leasable Area (GLA)

Gross Leasable Area GLA Net Leasable Area Real Estate Property Management Commercial Real Estate Leasing
Gross Leasable Area (GLA) is the total floor area of a building available for rental to tenants, usually measured from the outside walls without deducting for hallways, lobbies, or other common areas.
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Definition

Gross Leasable Area (GLA) refers to the total floor area of a building that can be rented out to tenants. It is typically measured from the exterior walls of the building and includes all rentable space. This is a crucial metric in real estate, particularly for commercial properties, because it determines the rental value and the revenue potential of a property.

Examples

  1. Shopping Malls: The GLA of a shopping mall includes all the retail spaces, anchor stores, and any other rentable spaces within the mall, measured from the exterior walls.
  2. Office Buildings: For an office skyscraper, the GLA includes all office spaces available for lease measured from the outer walls.
  3. Industrial Warehouses: The GLA in an industrial warehouse covers all the storage and operational areas that can be leased to tenants, calculated from the outer structural boundaries.

FAQs

Q1: How is Gross Leasable Area different from Net Leasable Area?

  • A1: Gross Leasable Area includes the total rentable space measured from the building’s outer walls, whereas Net Leasable Area excludes common areas such as hallways, lobbies, and restrooms.

Q2: Why is GLA significant for property owners?

  • A2: GLA is significant because it determines the potential rental income of the property. The larger the GLA, the more rentable space available, which can lead to higher revenues.

Q3: Is GLA used in both residential and commercial properties?

  • A3: While GLA can be used for any type of property, it is most commonly applied to commercial properties like shopping malls, office buildings, and industrial warehouses.

Q4: Does GLA include parking spaces?

  • A4: No, GLA typically does not include parking spaces. Parking areas are often considered separately from the building’s leasable area.
  • Net Leasable Area (NLA): The portion of the GLA excluding common areas like hallways, lobbies, restrooms, and mechanical rooms. This represents the actual rentable space available to tenants.
  • Common Area Maintenance (CAM): Fees charged to tenants to cover the maintenance of areas shared among tenants such as lobbies, elevators, and restrooms.
  • Building Load Factor: The ratio of a building’s GLA to its NLA, representing the portion of common area each tenant is responsible for.

Online References

  1. Investopedia - Gross Leasable Area
  2. Wikipedia - Leasable Area
  3. NAIOP Commercial Real Estate Development Association

Suggested Books for Further Studies

  1. “Commercial Real Estate: Analysis and Investments” by David M. Geltner and Norman G. Miller
  2. “Real Estate Principles: A Value Approach” by David Ling and Wayne Archer
  3. “Investing in REITs: Real Estate Investment Trusts” by Ralph L. Block
  4. “The Millionaire Real Estate Investor” by Gary Keller
  5. “The Real Estate Management Handbook” by Alphonso O. Ogbuehi

Fundamentals of Gross Leasable Area: Real Estate Basics Quiz

### What is included in Gross Leasable Area (GLA)? - [x] Total floor area from the building's outer walls - [ ] Only interior office spaces - [ ] Parking areas - [ ] Exterior landscape > **Explanation:** Gross Leasable Area (GLA) is the total floor area within the building measured from the outside walls, including all rentable spaces. ### How does GLA differ from Net Leasable Area (NLA)? - [x] GLA includes common areas such as hallways and lobbies - [ ] GLA is smaller than NLA - [ ] GLA includes parking spaces - [ ] GLA measures the building's exterior grounds > **Explanation:** GLA includes the entire rentable space within the building, including common areas, whereas NLA excludes these spaces. ### Why is GLA important for property owners? - [ ] It determines property taxes - [x] It helps estimate potential rental income - [ ] It dictates aesthetic improvements - [ ] It defines tenant parking spaces > **Explanation:** GLA is a crucial metric that determines the potential rental income of a property, directly impacting revenue. ### Does GLA include storage rooms for tenants? - [x] Yes, if they are part of the rentable space within the building - [ ] No, storage rooms are always excluded - [ ] Yes, but only if they are outside the building - [ ] No, GLA only includes residential areas > **Explanation:** GLA may include storage rooms if they are considered part of the rentable space within the building. ### What type of property primarily uses GLA as a metric? - [ ] Residential homes - [x] Commercial properties - [ ] Agricultural land - [ ] Historic landmarks > **Explanation:** GLA is primarily used for commercial properties such as shopping malls, office buildings, and industrial warehouses. ### Which areas are excluded from Net Leasable Area but included in GLA? - [x] Common areas like hallways and lobbies - [ ] Tenant serving the building's HVAC system - [ ] Designated parking spaces - [ ] Tenant-owned subleased offices > **Explanation:** Common areas like hallways and lobbies are included in GLA, but excluded from NLA, representing spaces not directly rentable. ### What is one component not typically part of GLA? - [x] Exterior landscaping - [ ] Retail space - [ ] Office suites - [ ] Public restrooms > **Explanation:** Exterior landscaping is not part of the GLA, which is focused on the interior rentable spaces from the building's outer walls. ### For an industrial warehouse, what would the GLA include? - [ ] Only the exterior loading docks - [x] Overall storage and operational areas inside the building - [ ] Parking lots - [ ] Public streets adjacent to the building > **Explanation:** The GLA in an industrial warehouse encompasses all storage and operational areas within the building's structural boundaries. ### What affects the value derived from the GLA of a commercial property? - [ ] The paint color of the building - [x] The total rentable space available - [ ] Proximity to residential areas - [ ] Roofing material quality > **Explanation:** The value derived from GLA depends on the total rentable space available, which directly impacts potential income. ### GLA can influence which financial aspect of a commercial property? - [ ] Water bills - [ ] Trash disposal costs - [x] Rental income calculation - [ ] Future repair needs > **Explanation:** GLA is crucial for calculating rental income, as it represents the total area that can be rented to tenants, impacting revenue.

Thank you for engaging with our detailed entry on Gross Leasable Area and completing our educational quiz. Keep building your expertise in real estate!

Wednesday, August 7, 2024
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