Common Area Factor (CAF) Explained
Understanding the common area factor — the ratio between rentable and usable area — how it is calculated at both the floor and building levels, and its impact on tenant costs.
Methodology
The common area factor is the multiplier that converts usable area to rentable area. It has two components: the floor common area factor (allocating shared floor spaces like corridors and restrooms) and the building common area factor (allocating shared building spaces like lobbies, management offices, and mechanical rooms). Total CAF = floor CAF × building CAF. A building with a 15% CAF means tenants pay for 15% more space than they exclusively occupy.
BOMA 2017 vs 2024
BOMA 2024 maintains the two-tier common area factor structure but adds transparency requirements. The 2024 standard recommends that landlords disclose both the floor-level and building-level components of the CAF, rather than presenting only the combined factor. This helps tenants understand what they are paying for.
Worked Example
Building common areas total 15,000 SF in a 200,000 SF building (after MVP deductions). Building CAF = 200,000 / (200,000 - 15,000) = 1.081. On a multi-tenant floor, floor common area is 2,000 SF out of 18,500 SF floor area. Floor CAF = 18,500 / (18,500 - 2,000) = 1.121. A tenant with 5,000 SF usable has rentable = 5,000 × 1.121 × 1.081 = 6,059 SF. Combined CAF = 6,059 / 5,000 = 1.212 (21.2% add-on).
Financial Impact
Each 1% change in common area factor changes every tenant's rent proportionally. In a building with $50/SF rent, a 1% CAF increase costs tenants $0.50/SF annually. For a 10,000 SF tenant, that is $5,000/year. Across a 200,000 SF building, a 1% CAF change represents $100,000 in annual revenue shift.
Lease Implications
Leases should state the rentable area, reference the BOMA standard version used, and ideally disclose the building's current common area factor. Some leases cap the CAF or specify that the CAF cannot increase beyond a stated percentage during the lease term — this protects tenants from landlord renovations that increase common areas.
Common Errors
- Presenting a single blended CAF without breaking out floor vs. building components
- Using different CAFs for existing tenants vs. new tenants in the same building
- Failing to update the CAF when building common areas change (lobby renovation, new fitness center)
- Applying the building CAF to areas that already include floor common area allocation
Additional Context
The common area factor is the single most important number in BOMA measurement from a financial perspective. It determines how much of the building's shared spaces each tenant pays for and is the primary mechanism through which landlords recover the cost of lobbies, fitness centers, conference centers, and other shared amenities.
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