What is Net Lettable Area?

Let us say you are standing in the middle of a spacious office. You look around and think, “All of this is what I am paying for, right?” Well, not exactly. In Australian commercial real estate, what you are really paying rent on is called the Net Lettable Area—the usable floor space that you, as the tenant, can call your own. This includes internal office space, meeting rooms, and private facilities, all enclosed by permanent walls and measured from the internal finished surfaces.

 

What does it not include? Lift shafts, tea rooms, shared toilets, public spaces, and other common areas.

Now, here is where it gets interesting. There is also something called the Gross Lettable Area, which includes everything within the lease boundary—even the bits you do not use day-to-day. The Net Lettable Area is more precise. It is the go-to metric for lease negotiations, lease documents, and rent calculations in commercial buildings and industrial buildings.

And to keep everyone honest, we have got a referee: the Property Council of Australia. Their official measurement guide lays out exactly how these areas should be measured—ensuring consistency and fairness across the industry.

How is Net Lettable Area Calculated?

Calculating the Net Lettable Area is not a guessing game. It follows a detailed and structured process.

In Queensland (Australian Property Institute. (2020). Technical information paper – Methods of measurement (ARPTIP 3)), the Net Lettable Area (NLA) is calculated using the Property Council of Australia's (PCA) Method of Measurement, as referenced and acknowledged in the API Technical Information Paper. NLA refers to the area within a commercial building that is available for exclusive use by a tenant, and is generally used for transactional purposes, including leasing, valuation, and outgoings apportionment.

Key Features of NLA Calculation in Queensland:

• Walls: Measured to the centreline of inter-tenancy walls and to the internal finished surface of external walls.

• Common Facilities (e.g., corridors, toilets, stairwells, plant rooms): These are excluded from NLA.

• Columns and internal walls within the tenancy are included in the measurement.

• Areas with a ceiling height under 1.5 metres are excluded under the PCA standard but may be included under the international IPMS standards with a note as a "Limited Use Area".

1. Office Buildings

• Measure to the inside wall for outside walls.

• Measure to the centre of any wall shared with another tenant.

• Do not count shared spaces like toilets, stairs, lift lobbies, or hallways.

• Do include all usable office space—even if it has a column or a wall inside it.

2. Retail Shops

• Measure to the outside wall if it faces the street.

• Measure to the centre of shared walls.

• If the shop is inside a shopping centre, measure to the mall line (an invisible line between the shop and the public mall space).

3. Industrial Warehouses

 

• Measure to the inside of the outside walls.

• Mezzanine floors (like small upstairs office areas) are included if they are built for the tenant.

• Shared driveways and loading docks are not included.

 

The Queensland-specific approach, including Building Format Survey Plans (post-1997) and Building Unit Plans (pre-1997), also influences how measurements are interpreted in strata-titled property, with most boundaries defined at the centreline for walls, floors, and ceilings (Australian Property Institute, 2020, p. 47).

What is Included:

• Internal partitions

• Structural columns and fire hose reel cupboards

• Enclosed rooms like office space, meeting rooms, and storage

What is Excluded:

• External walls and permanent outer building walls

• Window mullions, window frames, and decorative recesses

• Shared air conditioning ducts, equipment spaces, and service areas

NLA is calculated based on the dominant portion of the internal finished surfaces of permanent outer building walls, and to the midpoint of shared walls in buildings with multiple tenants.

Professional surveyors use tools like laser scanners, drones, and CAD software to get accurate NLA measurements. Every square metre counts, so getting this right can have big financial implications.

Why It Matters in Commercial Leasing

In Australian commercial real estate, rent is usually calculated per square metre. So if the Net Lettable Area is off by even a small amount, you could be overpaying—or undercharging—on your lease agreement.

For property owners, maximising NLA without overstepping into shared common areas means better rental yield. For residential tenants or businesses in office buildings, it ensures they are paying only for what they use.

Plus, accurate NLA calculations help resolve disputes and build trust between landlord and tenant.

Where is Net Lettable Area Used?

The Net Lettable Area shows up in all types of commercial buildings and industrial parks:

Office Buildings

Defines tenancy areas that exclude shared boardrooms, covered areas, and public spaces.

Retail Tenancies

Used to calculate tenancy areas in shopping centres, where each premises may vary in usable floor area.

Industrial Buildings

In sheds or warehouses, the NLA often includes the full internal floor but not shared services or docks.

Who Sets the Rules?

Australia uses the Property Council’s standard rather than BOMA. Their rules specify what to include, what to exclude, and how each building should be treated. This standardisation supports better property management and clearer expectations between landlord and tenant.

The Legal Edge of Getting It Right

Misstating your Net Lettable Area on a lease document? That can trigger financial claims, rent reductions, or renegotiation of the lease term.

It is why certified NLA data is critical, especially when the total number of tenants in a property increases and space-sharing becomes more complex.

NLA and Property Value

NLA directly affects market value. A higher NLA usually means higher rental income. Since property valuation is often tied to rental earnings, maximising usable space makes a building more appealing to investors.

Want to boost returns? Renovate or reconfigure to gain more NLA without expanding the outside faces of your building.

Best Practices for Measurement

• Use certified professionals

• Re-check after renovations

• Reference the official measurement guide

This ensures all areas are measured correctly—especially in buildings with complex layouts or multiple tenants.

When You Are Negotiating Leases

Net Lettable Area plays a starring role in lease negotiations. It informs:

• Lease term discussions

• Costs for services

• Incentives and paid fit-outs

Go in with certified NLA measurements and you are in a stronger position.

What About Older Buildings?

Older or heritage sites often have outdated plans. That means unreliable NLA calculations. Curved walls, unusual room shapes, and unrecorded extensions all make for difficult measurement. A full, modern survey is the only way to get clarity.

A Real-World Example

Let us say you are managing a commercial real estate asset in Brisbane. The gross floor area is 2,800 square metres. After removing shared facilities, you are left with 2,100 square metres of Net Lettable Area.

At $700 per square metre per year:
Total Rent = 2,100 × 700 = $1,470,000

Mistaking that for 2,300 square metres would inflate rent and possibly cause a dispute. Always verify.

 

Another Scenario
You own a commercial office building in Fortitude Valley with a total floor plate of 1,000 square metres.

Breakdown:

• Shared lobby: 50 square metres

• Common toilets and cleaners’ room: 30 square metres

• Fire stairs: 20 square metres

• Lift core: 40 square metres

• Air conditioning plant room: 10 square metres

• Usable tenant areas: 850 square metres

Calculation: Only the usable tenant areas are included in NLA.

Net Lettable Area = 1,000 - (50 + 30 + 20 + 40 + 10) = 850 square metres

Why It Matters: If your lease agreement states $600 per square metre per annum:

Annual Rent = 850 sqm × $600 = $510,000 per annum

If you mistakenly used 1,000 sqm:

Overstated Rent = 1,000 × $600 = $600,000 per annum (a $90,000 discrepancy)

 

This could lead to tenant disputes or rent roll misreporting to banks or valuers.

 

Avoiding Common Errors

• Do not confuse floor area with lettable area

• Double-check that service areas, tea rooms, and toilets are excluded

• Do not rely on outdated blueprints or hand-drawn plans

Using the Right Tools

From drones to 3D scanners, technology helps you get precise, fast, and repeatable NLA measurements. Combine that with certified floor plans, and you have got a bulletproof record.

NLA vs Other Terms

 

Metric	Includes	Excludes	Use Case
Net Lettable Area	Exclusive tenant areas	Common areas, services	Lease, rent calculations
Gross Floor Area	Total indoor area	None	Planning, development
Usable Area	Some overlap with NLA	Structural columns, ducts	Fit-out design

Operating Costs and Fairness

Tenants often help cover building services—like insurance, cleaning, and maintenance. These costs are usually split based on each unit’s Net Lettable Area.

If your office takes up 400 square metres in a building with 2,000 square metres NLA, expect to pay about 20 percent of the shared expenses.

Frequently Asked Questions

1. Does NLA include shared bathrooms?
No, only exclusive-use areas are counted.

2. Can NLA change during a lease?
Yes—if the layout changes, so does the calculation.

3. What if I disagree with the NLA?
Request a remeasurement. Bring in a certified professional.

4. Are parking spaces included?
Not usually—they are listed separately. Check your lease.

5. Who pays for the measurement?
That is typically decided in the lease agreement.

Final Word

In the world of commercial real estate, your Net Lettable Area is more than a number—it is a value-driver, a negotiation point, and a legal safeguard. Whether you are a landlord, tenant, or property manager, getting this right protects everyone’s interests.

So use the tools, follow the Property Council’s standards, and always double-check the maths. Because when it comes to lettable area, every square metre counts.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

Liability Limited by a Scheme approved under Professional Standards Legislation