What is GLA in real estate?

When it comes to real estate, understanding the various metrics and terminologies is crucial for making informed decisions. One such key metric is gross leasable area (GLA). Whether you’re an investor, property manager, or tenant, knowing what GLA is and how it impacts your property can help you navigate the real estate landscape more effectively. In this blog post, we’ll delve into the concept of GLA, its calculation, and its importance in different property types.

What is GLA?

Gross leasable area (GLA) refers to the total floor area that a tenant can use and is charged for in a commercial property. Unlike gross floor area (GFA), which includes all spaces within the building, GLA focuses solely on the rentable space. This includes areas like retail spaces, offices, and service areas that can generate income for the property owner.

Is GLA the same as square footage?

While GLA is measured in square footage, it is not the same as the total square footage of a building. GLA specifically refers to the area that can be leased out to tenants, excluding common areas like hallways and restrooms.

Components of GLA

GLA includes all the areas that are available for lease to tenants. So, this encompasses:

• Retail spaces in shopping centers
• Office spaces in commercial buildings
• Service areas like storage rooms that are leased

However, GLA excludes common areas such as:

• Hallways
• Restrooms
• Maintenance rooms

In summary, these exclusions are crucial as they do not generate direct rental income.

What is GLA in appraisal?

In real estate appraisal, GLA is used to determine the value of a property based on its income-generating potential. Appraisers calculate the GLA to assess the rental income a property can produce, which is a key factor in its overall valuation.

Calculation of GLA

Calculating GLA involves measuring the interior walls of the leasable spaces. So, here’s a step-by-step guide:

1. Measure the interior walls. Measure the length and width of the interior spaces available for lease.
2. Calculate the area. Multiply the length by the width to get the area in square feet or square meters.
3. Sum up the areas. If there are multiple leasable spaces, sum up all the individual areas to get the total GLA.

For example, if a shopping center has three retail spaces measuring 1,000 sq ft, 1,500 sq ft, and 2,000 sq ft respectively, the total GLA would be 4,500 sq ft.

What does GLA mean in the lease?

In lease agreements, GLA is the basis for determining the rent a tenant will pay. Also, landlords and tenants can ensure fair and precise rental terms by accurately measuring the GLA for the calculation of rent on a per-square-foot basis.

What is the difference between GLA and GBA?

Gross leasable area (GLA) and gross building area (GBA) are both important metrics in real estate, but they serve different purposes:

• GLA. Refers to the area that can be leased to tenants and generates rental income.
• Gba. Includes the entire building area, encompassing all enclosed spaces, including common areas, mechanical rooms, and more.

So, understanding the distinction between GLA and GBA is crucial for accurate property analysis and valuation.

Importance of GLA

GLA is a critical metric for several reasons:

• Lease agreements. Lease agreements are often based on the GLA, affecting rent calculations and lease terms.
• Property valuations. GLA influences property valuations, as larger leasable areas typically generate higher rental income.
• Income potential. Understanding the GLA helps in assessing the income potential of a property, crucial for investors and property managers.

GLA in different property types

GLA usage varies across different property types:

• Retail properties. In shopping centers and malls, GLA includes all retail spaces available for lease. So it is crucial to determine the rent for each tenant.
• Office buildings. Also, in office buildings, GLA includes all office spaces leased to businesses. Accurate GLA measurement is essential for fair rent distribution.
• Industrial properties. So, for warehouses and industrial spaces, GLA includes all areas available for manufacturing, storage, and distribution activities.
• Mixed-use properties. In mixed-use properties, calculating the total GLA separately for retail, office, and residential spaces and then allocating it among them.

Bottom line

In summary, gross leasable area (GLA) is a vital metric in real estate that represents the total floor area available for lease. Also, understanding GLA helps in accurately calculating rents, determining property valuations, and assessing income potential. Finally, whether dealing with retail, office, industrial, or mixed-use properties, knowing how to measure and apply GLA is essential for success in the real estate market.

Written by Vanessa Gallanti. July 9, 2024

Enthusiast about planning, project management, construction materials and technology, and construction. A civil engineer from Los Andes University and a content writer for Kukun.