Definition
Net Leasable Area (NLA) is a real estate term used to describe the total floor space in a building or project that is available and can be leased to tenants. It excludes areas such as common spaces (hallways, lobbies), and mechanical areas (space for heating, ventilation, and air conditioning systems or elevators). NLA is a critical component in determining rental prices and is often used in leasing contracts.
Examples
Office Buildings: In an office building, the Net Leasable Area would be the sum of all office spaces available for rent, excluding shared areas like hallways, restrooms, and lobby spaces.
Shopping Malls: For a shopping mall, the Net Leasable Area includes the individual retail stores available for lease, not the aisles, food courts, or common areas.
Industrial Warehouses: Industrial spaces would consider the storage and operational spaces for lease, leaving out any common facilities such as loading docks if they are shared.
Frequently Asked Questions (FAQs)
What is the difference between Net Leasable Area (NLA) and Gross Leasable Area (GLA)?
NLA refers to the space that can be rented out and does not include common or mechanical areas, while GLA includes all rentable areas within a building, including common areas.
How is Net Leasable Area calculated?
Net Leasable Area is calculated by measuring the total floor space available for tenants and subtracting the area occupied by common facilities and building operational systems.
Why is Net Leasable Area important for tenants and landlords?
For tenants, NLA helps in understanding the exact space they are paying for. For landlords, it is crucial for accurately calculating rent and maximizing rental income.
Does Net Leasable Area include bathrooms?
No, typically bathrooms and other common areas such as hallways and lobbies are excluded from the Net Leasable Area.
Can Net Leasable Area change over time?
Yes, changes in the structure of the building such as renovations, additions, or re-purposing of spaces can alter the Net Leasable Area.
Related Terms
- Gross Leasable Area (GLA): Total floor area designed for tenant use, including common areas and shared facilities.
- Common Areas: Areas within a building that are available for use by more than one tenant, such as hallways, lobbies, and restrooms.
- Building Efficiency Ratio: A ratio comparing the total useable or net leasable area to the gross area of a building.
Online References
- Investopedia: Understanding Leasable Space
- Building Owners and Managers Association International (BOMA)
- Commercial Real Estate Glossary
Suggested Books for Further Studies
- “Real Estate Investment and Acquisition Workbook” by Howard A. Zuckerman and George D. O’Dell
- “Commercial Real Estate Analysis and Investments” by David M. Geltner and Norman G. Miller
- “The Complete Guide to Investing in Commercial Real Estate” by Steve Berges
Fundamentals of Net Leasable Area (NLA): Real Estate Basics Quiz
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