Price Per Square Foot

Price per square foot normalizes the purchase price across properties of different sizes, making it easier to compare a 10,000 SF strip center to a 50,000 SF retail power center. This metric is widely used in offering memorandums, appraisals, and broker marketing materials. It is most useful when comparing properties of similar type, quality, and location since those factors heavily influence PSF values.

PSF can be applied to both purchase price and rental rates. When used for rental analysis, it expresses the annual or monthly rent on a per-square-foot basis. For example, a 2,000 SF office suite leasing at $24 PSF annually costs $48,000 per year or $4,000 per month. Both buyers and tenants use PSF to quickly assess whether pricing is in line with the market.

Be careful to distinguish between rentable square feet (RSF) and usable square feet (USF), particularly in office buildings. RSF includes the tenant's proportionate share of common areas (lobbies, hallways, restrooms), and is always larger than USF. The ratio between them is called the load factor, which typically ranges from 10-20% in office buildings. A property quoted at $30 PSF on a rentable basis might be $36 PSF on a usable basis. Always confirm which measurement standard is being used when comparing PSF figures.