When using the price per square foot unit for valuing properties, what area is typically considered?

The approach of using price per square foot for valuing properties often focuses on net rentable area. This is because net rentable area specifically considers the space that can be leased out to tenants, excluding any common areas, such as lobbies or hallways that are not directly rentable. This measure provides a more accurate representation of the income-generating potential of the property.

Net rentable area is a critical metric in commercial real estate, where the focus is on revenue generation. It allows appraisers and investors to better assess value based on the productive space that contributes directly to income, offering a clearer financial picture.

While gross floor area includes all spaces within a building, usable area may refer to all areas that can be occupied or utilized, and constructed area generally refers to the total area of the building, which may not accurately reflect the income potential. Thus, net rentable area is the most relevant when considering how to fairly value a property based on its income-generating capabilities.