Loss factor

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In commercial real estate in the USA, a building's loss factor is the percentage of the building's area shared by tenants or space that are dedicated to the common areas of a building used to calculate the difference between the net (usable) and gross (billable) areas.[1]

That portion of the space is considered "lost" because it cannot be directly leased and the maintenance and operation costs must be covered by the other rentable areas.[2]

The loss factor is often confused with load factor, but the formulas for each term vary.[3]

The loss factor is calculated as follows:

Loss Factor = (Rentable Area – Usable Area) / Rentable Area

The Building Owners and Managers Association has established a standard with American National Standards Institute, ANSI/BOMA Z65.1-2010 for measuring floor area and calculating gross leasable area and loss factor.[4]

References

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