Header image for How to Calculate Unit Square Footage for an apartment building when all you have is the total building SF blog post

How to Calculate Unit Square Footage for an apartment building when all you have is the total building SF

In commercial real estate, accurately estimating leasable or unit square footage is essential for brokers, sellers, investors, appraisers, and property managers. Often, the only available figure is the total gross building square footage (also called gross building area or exterior gross area), which includes the building's full footprint measured to the outside of the exterior walls. However, when estimating the rentable or usable area for individual units—such as apartments, offices, or retail spaces—professionals must account for the thickness of those exterior walls, as they reduce the actual interior space available.

The 4% Rule of Thumb for Exterior Wall Deduction

A widely accepted industry shortcut for quick estimates is to deduct approximately 4% of the total gross square footage to approximate the impact of exterior walls. This rule provides a reasonable ballpark figure without requiring detailed architectural plans or on-site measurements.

Why 4%?

It reflects typical wall thicknesses in modern commercial and multi-family buildings (e.g., 8–12 inches for concrete, masonry, or framed exterior walls). The deduction accounts for the perimeter wall volume across all sides, which proportionally reduces the interior floor area.

Practical Example

Consider a simple square building measuring 100 ft × 100 ft, resulting in a total gross building area of 10,000 square feet.

Assume 12-inch-thick (1 ft) exterior walls.

Perimeter wall contribution: 12 inches thick × 100 ft length × 4 walls = 400 square feet of wall area (simplified perimeter calculation).

Deduction percentage: 400 sq ft ÷ 10,000 sq ft = 4%.

This means the estimated interior (rentable or usable) square footage would be around 9,600 sq ft after deducting for exterior walls. In practice, this quick method helps brokers and sellers provide fast unit size estimates for marketing, pricing, or preliminary valuations.

Important Note: This 4% figure is a rule of thumb only. Actual deductions vary based on:
  • Wall thickness (thicker in older masonry or concrete buildings, thinner in modern steel-frame or curtain-wall systems).
  • Building shape (rectangular vs. irregular footprints).
  • Projections, recesses, or architectural features.
  • Measurement standards applied.

How Exterior Walls Fit into Standard Measurement Methods

Commercial real estate relies on standardized guidelines, primarily from the Building Owners and Managers Association (BOMA), to ensure consistency in square footage calculations. Here's how exterior walls are typically handled:

  • Gross Building Area (GBA) or Exterior Gross Area (EGA) — Measured to the outside face of exterior walls. This includes the full thickness of walls and is used for construction costing, zoning, or overall building valuation. No deduction for wall thickness here.
  • Rentable Square Footage (RSF) — Often measured to the inside face of exterior walls (per BOMA Office or Industrial standards). Wall thickness is effectively "deducted" from the gross area when converting to rentable space.
  • Usable Square Footage (USF) — Measured to the interior finished surfaces, excluding wall thickness entirely for the tenant's occupiable space.

In multi-tenant or multi-unit properties (e.g., apartments or office buildings), the gross-to-rentable conversion often results in a small percentage reduction due to exterior walls, common areas, and vertical penetrations. The 4% rule aligns roughly with this for many standard buildings but can range from 2–8% depending on design.

BOMA Standards Insight

BOMA guidelines (e.g., ANSI/BOMA Z65 series for office, industrial, multi-family, etc.) emphasize measuring to the dominant portion of exterior walls (often the inside finished surface for rentable area). Abnormally thick walls (e.g., historic masonry) do not alter the boundary rules—measurements stay consistent, but the effective deduction increases slightly in practice.

When and Why This Matters

  • Brokers & Sellers — Use the 4% deduction for quick marketing materials, cap rate calculations, or pricing per unit when full as-built drawings aren't available.
  • Investors & Appraisers — Helps estimate potential rentable income by approximating leasable area from gross figures.
  • Tenants — Understanding wall deductions prevents surprises in lease negotiations, where rent is based on rentable (not gross or usable) square footage.

Accuracy Tip — For precise valuations or disputes, always commission a professional BOMA-certified measurement or review as-built plans/architectural drawings. Tools like laser measurers, 3D scans (e.g., Matterport), or architect-verified surveys provide the most reliable results.

Bottom Line

The 4% exterior wall deduction is a fast, practical heuristic for converting gross building square footage to estimated unit/leasable area. In the example of a 10,000 sq ft building, deducting 4% yields ~9,600 sq ft of potential rentable space—close enough for initial discussions but not a substitute for formal measurements under BOMA or other standards.

Mastering these nuances helps stakeholders make informed decisions, negotiate better leases, and maximize property value in commercial real estate. If you're working on a specific property, consulting local market practices or a certified measurer is always recommended for the highest accuracy.