Did you measure your demised premises when Landlord provided the keys?  Probably not.  Hardly anyone does.

During 30+ years of leasing commercial real estate, the one important detail that I see overlooked most often by franchisees, entrepreneurs and small emerging-brand retailers is to take the time to measure the size of their leased space. Doing this ensures that the ACTUAL square-foot size for the leased premises is used in the calculation of your base rent.

This explanation is not meant to overwhelm you. You purchased a PRS membership because “you want to know what you don’t know” and this single section of our website can immediately create value for you by saving you money.  All of the established brands meticulously address these steps, and you should too.

Did you know that there are two parts to determining the calculation of the amount of your base rent and your triple net charges (CAM, Taxes & Insurance)?

PART ONE is verifying the actual square footage of your Demised Premises for calculating Base Rent.

PART TWO is determining whether the landlord is using the correct fraction (numerator and denominator) to determine what your prorata share is for the triple net charges pertaining to the overall shopping center where your store is located.

This is how to accomplish this verification step. Let’s get started by sharing a real-life example.

First, assume that the space you leased was supposed to be 25’ wide and 80’ deep, totaling 2,000 sq. ft. If you think about it logically, it is almost impossible for those dimensions to be exactly 25’ x 80’. Let’s be honest - it’s not almost impossible, it is IMPOSSIBLE for the final dimensions to be EXACTLY 25’ x 80’. When the shopping center and the individual demised spaces were constructed, minor adjustments were made during the process so that the actual location of both the external building walls and the internal demising walls ended up being shifted a few inches left or right to accommodate on-site construction conditions. So, the actual size of EVERY tenant space would not match the projected size contained in the building plans, and this adjusted size was then transferred to the tenant’s lease. UNLESS THEY MEASURE IT following construction, and then amend the lease to reflect the actual square footage. Be aware that each tenant is responsible for measuring their own leased space and bringing any discrepancy to their landlord’s attention.

As a way to illustrate the financial value that this kind of discrepancy could have to you as a tenant, let’s use another example.

In the above leased space, the width and depth were supposed to be 25’ x 80’. Let’s assume that your demising wall (the wall between you and the adjacent tenant) was installed 6-¾” off from where it should have been. That 6-¾” error, times the 80’ of depth, equals 45 sq. ft. of space that you don’t occupy, yet you would be paying both rent and triple net charges for it.

If your base rent was $25.00 per sq. ft. and your NNN’s were $5.00 per sq. ft., that 45 sq. ft. mistake would cost you $1,350 annually (45 sf x $30 psf). If your base rent and NNN charges are higher than $30 psf, you would be overcharged even more.

One of the testimonials on our website details the experience of an entrepreneur / franchisee who had leased 4,400 sq. ft. in a shopping center. The landlord had expressed that the shopping center size totaled 110,732 sq. ft. In reality, the shopping center was 147,362 sq. ft in total size. Once the tenant learned about the incorrect information that the landlord was using and brought it to their attention, the tenant was able to save $45,000 in their occupancy costs. 

Now that you can immediately see the value of measuring both your own space and the overall shopping center, PRS can also explain how to do it.

--- Quote from a typical retail lease: Tenant’s prorata share of CAM, Taxes & Insurance will be assessed, multiplied by a fraction, the denominator being the total number of square feet of building floor area comprising the shopping center and the numerator being the number of square feet of building floor area comprising the Demised Premises

So then, how do I measure my demised premises?

1.      First, determine the width and depth of the space you have leased.

2.      The depth of a tenant’s leased space is measured from the OUTSIDE of the front wall to the OUTSIDE of the back wall. Most tenants will use a laser measurer which can be purchased at Home Depot or Lowe’s for under $100 – see photo below. The cost of a Laser Measurer is based on the distance that the beam will “shoot,” so make sure that the measurer you purchase has the ability to cover the depth of your space.

3. To determine the depth of your space, you would shoot the laser beam from the interior of the front wall to the interior of the backwall, and let’s assume that the distance is exactly 78’. Now add the thickness of both exterior walls to that number to find the total depth. Since most exterior walls are comprised of an 8” block wall with a two by four (which is 3-½”) and a 1/2” of sheet rock, this means that your exterior front wall is 12” thick. So, then the back wall, being of the same construction, is also 12” thick. Thus, the depth of your space has been confirmed at 80’.

I have found the easiest way to measure a shopping center is to download the free application called Google Earth Pro and then type in the address of the space you leased. Below is an example of a shopping center in Pittsburgh, PA. The application also has a “line ruler” which you can use to measure all the straight lines that make up the shopping center.

The most accurate way to measure a shopping center is with a 12” Professional Lufkin Measuring Wheel which again can be purchased at Home Depot or Lowes for about $65.00.

The “brown” top left roof is a building 14’ x 35’ = 490 sq. ft.