Commercial real estate is quite different from residential real estate, and the details can sometimes be intimidating. There are many complex terms that are used to describe properties, contracts, pricing, etc. Before investing in commercial space, it is important to get a basic understanding of some of these important commercial real estate terms used in the industry. 

Usable Square Footage

The usable square footage is the amount of space that can actually be used by a tenant in a property. This only includes actual working spaces like offices, and does not include places in a building such as bathrooms, stairwells, or hallways. 

Rentable Square Footage

On the other hand, rentable square footage includes the usable square footage, plus any shared space like the bathrooms, hallways, closets, etc. It is the total amount of square footage in the property being leased. This is the number more commonly used when marketing a space. 

Building Classifications

Commercial properties are split up into 3 different classifications of space. These are determined by when the space was built or updated, the current condition, location and rent prices. 

Class A: This is the highest class of space. It is the newest or most recently renovated. They are of the highest quality with great locations and rent prices. Here is an example of a class a space. 

Class B: These are older, but still good quality and rather average spaces. They have room for improvement and can be updated to be a class a space depending on the location. 

Class C: These are the lowest on the list because they are much older than the others and typically need more significant maintenance. They do have the lowest prices, so there is a better chance of high returns.  

Price Per Square Footage

This is used for industrial buildings, office buildings and retail space to determine what the property is worth when buying and selling. To get this number, you have to divide the price of the property by the square footage. This number also depends on the area the building is in. Knowing what the price per square foot is of a property you are interested in selling or buying will help you ensure you are making a good deal. Use this calculator to help.


If you have more questions after reading through this list don’t hesitate to give us a call. As always, we will help you understand and navigate each of these commercial real estate terms and concepts when working together.