Gross Leasable Area (GLA)
Hello landlords and tenants, I’m here to talk about “gross leasable area or GLA” and what that means in a commercial real estate lease. My name is Jenna Zebrowski and I am the attorney behind LawByJZ.com. GLA is going to be the entire amount of floor space of the shopping center or building that contains the leased premises that is leasable by a tenant.
Tenant’s contribution to triple net costs is going to be based on the proportion of the space the tenant leases. It’s important to make sure that the Landlord has measured this area correctly, in a new build or an existing location, so that proportionate share is measured correctly.
Commercial Real Estate Case Study
GLA: Gross Leasable Area Controls Tenant Costs
Grossly leasable area (GLA) was really important in determining how much Britney’s business had to pay to maintain a shared pylon sign located in the parking lot. Britney’s business took up a very small proportion of a really big shopping center, but the sign had great visibility and was important to her franchise requirements. She paid her proportionate share of maintenance of the pylon, based on her proportionate share of the GLA.
Her management company changed and they decided to repave the parking lot. They sent Britney a bill based on her proportionate share of the GLA. It seemed really high, so we went back to her lease and re-read the definition of the GLA in her lease. Her GLA included the part of the parking lot with the pylon, and the small part in front of her location.
The management company included the entire parking lot and charged her a much larger amount than they should have.
Britany turned to her attorney to review the lease and provide advice, because the management company insisted that she was reading the lease wrong. After review, we concluded that if that was the case, then because the GLA was larger, she should have been paying a much smaller percentage of the pylon sign, based on her proportionate share. Then the management company would owe her a refund of the large amounts she had been overpaying!
Either way, she was going to save money- either she would get a refund for the overpayment for the sign maintenance and pay a lot less in the future, or she would not have to pay the large amount that she was quoted for her share of the parking lot repaving. After speaking with the attorney and reviewing the lease, the management company agreed with Britany and her attorney and that she would not have to pay the larger amount.
She was able to take the difference from her budget and use it towards a new sign panel when her franchise required an update of her signs! The improved visibility also increased her sales in the shopping center.