Gross Leasable Area (GLA)

Definition of "Gross leasable area (GLA)"

Written by

Michael Flowers

Fairfax Realty

"Gross Leasable Area" or GLA is more than just jargon. Understanding property value and potential income is super important, especially in commercial real estate.

What does Gross Leasable Area (GLA) mean?

Are you about to dip your toes in the rental game? Then, you should know what GLA means! Gross Leasable Area, often called GLA, is the entire floor area destined for tenant occupancy and use. This is the core of your property. Consider it the 'rentable' part of a building. It encompasses everything that can be leased out to tenants. 

Understanding GLA is crucial for property managers and real estate professionals as it directly impacts a property's potential income. In other words, GLA is a game-changer in commercial real estate as it directly influences the rent a landlord can collect. The bigger the GLA, the more potential income.

What structures do GLAs include?

Almost any commercial property type can have a GLA. This includes:

1. Shopping centers: These are your malls, strip malls, and shopping plazas. Every store inside has a specific GLA.
2. Office buildings: GLA encompasses each office space that can be rented out, including individual offices, conference rooms, kitchens, and any other areas tenants can rent. 
3. Industrial buildings: Think warehouses and factories. The leasable area can be the space used for production, storage, or office space within the building.
4. Even mixed-use buildings that combine retail and residential spaces have GLA. Basically, if it can be rented, it counts toward GLA.

What’s the difference between Gross and Net Leasable Area (NLA)?

It's essential to distinguish GLA from NLA (Net Leasable Area). While GLA includes the total rentable space, NLA is more specific. NLA only counts the actual usable area within the tenant's space.

Let's look at the following example! In a shopping mall, the GLA includes everything available to rent out, including storage, hallways within the leased space, and bathrooms. On the other hand, NLA would exclusively cover the sales floor of each store.

While GLA is perfect for comprehending a property's overall leasing potential, NLA zeros in on functional usage, hence, GLA typically ends up being a little larger than NLA.

Calculating Gross Leasable Area

Calculating GLA is not rocket science, but it does need precision. Here's a general idea of how it’s done:

• Measure the boundaries: Start with the building's inside surface boundaries. Measure the length and width of all leasable areas.
• Include everything rentable: Everything from interior walls to spaces within tenanted areas counts. Don’t forget storage spaces, mezzanines, and interior balconies.
• Sum up the areas: Add up all the areas measured. Exclude non-rentable areas outside the lease, such as stairwells, elevators, and shared bathrooms.
• A handy method is to use a detailed floor plan of the property. This allows for accurate figures and prevents missing out on any rentable space.

Why does Gross Leasable Area matter?

GLA helps estimate a property's revenue potential. The larger the GLA, the higher the rent collection potential. This is crucial for both landlords and motivated real estate investors. Secondly, it boosts property valuation: Properties with larger GLA are often valued higher. They offer more rentable space, making them more attractive for investment.

Thirdly, knowing the GLA helps tenants understand the actual space they're paying for, including shared and exclusive areas. Last but not least, the GLA is often a fundamental part of lease agreements. It's used to set out terms and conditions clearly.

Ultimately, GLA is an essential concept in the real estate world. Whether you're a buyer, seller, or investor, understanding GLA can help you make smarter decisions.

Conclusion

Gross Leasable Area is a straightforward yet vital part of commercial real estate. Remember what GLA stands for and why it matters when you're next inspecting a property or reading through a lease. It's about maximizing revenue potential, understanding space, and making informed decisions. 

Next time you walk through a shopping mall or pass by an office building downtown, you'll better understand the space and its rental value. Now, you're a step ahead in the real estate game! If you need help, why don't you contact top real estate agents directory members?