Gross Leasable Area and Excluded Area

In an environment where it has become increasingly difficult for landlords to lease space in their retail projects, landlords have employed a new strategy to compensate for the ever increasing vacant space within their retail projects. The newest strategy appears to be excluding space from what otherwise was considered gross leasable area and placing that space in the category of “excluded area” or “non-gross leasable area.” Since many of the terms of the lease are tied to the gross leasable area or gross leased area of the retail project, including, but not limited to, the tenant's proportionate share of operating costs, taxes, insurance and other additional rent items, as well as determining whether a co-tenancy provision has been triggered, it has now become vitally important during lease negotiations to have a complete understanding of what area in the retail project is being used to determine various calculations under the Lease. This article addresses the topic of what is gross leasable area, what is gross leased area, what is deemed to be excluded area, and the concept of “converted” area under present-day leasing situations.