Load Factor

Load factor is the ratio of a tenant's rentable square footage to their usable square footage, representing the proportionate share of common areas (lobbies, hallways, restrooms) added to the tenant's actual occupied space. A building with 100,000 SF of usable space and 115,000 SF of rentable space has a 15% load factor, meaning tenants pay rent on 15% more square footage than they physically occupy. Load factors typically range from 10-20% in office buildings and 5-15% in retail and industrial properties. Understanding load factor is critical for comparing lease economics across properties - a lower rent per SF on a high-load-factor building may actually cost more than a higher rent per SF with a lower load factor. NNN investors should understand load factor because it affects tenant satisfaction and renewal probability.