Advice on Avoiding Misunderstandings in Premises Measurement

When a landlord and tenant contemplate entering into a lease, one of the first business terms they discuss is the number of square feet that will comprise the premises. The square footage of the leased premises is of extreme economic importance in several instances. First, square footage is typically used in calculation of base rent, whether so stated in the lease or not. Second, the tenant's proportionate share of operating expenses for a multi-tenant building is determined based upon the ratio between the square footage of the premises and that of the entire building. Third, any tenant improvement allowance will normally be based upon the number of leased square feet.

The question of measurement comes into play in various ways during the drafting and negotiation of a lease. The parties must first agree to the square footage of the premises prior to entering into the lease. If the premises are shell space to be built out, both parties may desire the ability to re-measure the square footage of the finished space. Finally, if a lease includes the tenant's right to expand into adjacent space, the method of measuring and defining the expansion space must be specified in the lease to prevent later disagreements about the expansion square footage.