Gross lettable area (GLA) is the floor space a tenant can actually lease inside a building, measured under the Property Council of Australia method. The brochure number is often bigger because it can include canopies, awnings, yards, or rooms that were approved but never built. I check the rent and price per square metre against the real lettable area, not the flyer.
Picture this. You open a sales flyer for a warehouse. It says 1,000 square metres. The rent looks fair for that size. Then the lease turns up, and it says the tenant rents 800 square metres. The other 200 is a canopy and a concrete yard. Nothing is hidden. But the maths on the flyer was done on the bigger number, so the deal looked better than it is.
That gap is what this article is about. I'm a client-side buyers agent for investors, based in Adelaide, and this is one of the first things I check on a commercial deal.
If you want the wider picture, other guides cover the income side. Commercial passing rent vs net income shows how to rebuild the real income. Capitalisation rate for buyers explains the cap rate. Commercial property yield Australia, how to calculate WALE and commercial property due diligence cover flyer yields, lease length and the order of checks. Here I stay on one thing: the area.
Marketing totals vs GLA
Flyers and agents often blur two different numbers.
Marketing area, or "building size". On a flyer this can mean almost anything. It might be the whole building measured from the outside. It might be a rounded figure. It might be warehouse plus canopy plus yard, added together as one number. The Property Council of Australia treats gross building area as a measure of the building, not the area a tenant leases.
Gross lettable area (GLA). This is the leasing measure the Property Council of Australia uses for warehouses, industrial buildings, freestanding supermarkets and showrooms. In plain terms, it is the floor space inside a tenancy on each level. It is measured from the outside faces of the main external walls, and to the middle of any walls shared with a neighbour or common area. That wording is reproduced in the Victoria Government Gazette S126 (19 August 1999). Surveyors who follow this method usually list a mezzanine the tenant added themselves separately.
If the flyer number is bigger than the area in the lease, I redo the price and the rent per square metre on the lease area.
Canopies, awnings and yards are not GLA
This is where industrial and showroom flyers get loose.
The method wording in the Victoria Government Gazette leaves out balconies, verandahs, awnings and covered areas from lettable area. Surveys done to the Property Council method usually leave out canopies, courtyards, open loading docks and hardstand. Hardstand is the sealed outdoor yard used for trucks, parking or storage.
That space can still be useful to a tenant. A big canopy or yard might be why they want the site. The mistake is pricing it as if it were the same as enclosed floor space. I ask for an area schedule that splits the site by type: inside floor, canopy, yard. Until that matches the lease, I treat the flyer rent per square metre as a guess.
Rooms that were approved but never built
Office, medical and mixed use buildings have a different trap.
These flyers often quote net lettable area (NLA). NLA is the leasing measure for offices, roughly the usable floor space a tenant gets once shared areas like lifts and stairwells are left out. The problem is where the number came from. Sometimes it comes from a development approval (DA), which is council permission to build something. Sometimes it comes from a building consent or an architect's drawing. Those papers can show extra consult rooms, a whole wing or a future floor that nobody ever built.
A DA is permission. It is not a finished building. An approved room you cannot walk into is not a room you can rent today.
So my rule is simple:
- Keep the marketing NLA and the built area as two separate numbers.
- Check the flyer against the as-built plans and the lease.
- Take out any space that was never built before working out rent per square metre.
- Treat "DA approved" space as a possible future upside, not income on day one, unless the work is finished and a tenant already rents it.
Get completion certificates before you trust the area
If a building has been added to, changed, or sold on an "approved plans" story, I ask for proof that the work was finished.
That usually means an occupation or completion certificate for the works that created the rooms. Then I want a survey or lease area schedule, done to the Property Council method, that matches what is actually on site. A flyer that only quotes the DA drawings is not proof.
If the seller cannot show that the rooms were finished, I price the deal on what is certified and built. Any approval left over is a bonus, priced as a maybe. Face rent vs effective rent makes a similar point about headline rent. Price what is built, not what is approved.
Check the flyer against the paperwork, and the plan against the floor
Two simple checks close most of the gap.
Flyer vs paperwork. I put the flyer area next to the survey, the lease and the completion documents. Any square metre that only shows up on the DA drawings comes out of my numbers. If the agent cannot explain the difference in writing, I treat the flyer figures as unconfirmed.
Plan vs floor. I walk the building with the plan in hand. I count the rooms. I check whether "future" or "stage 2" space is a finished room, an empty shell, a bare concrete slab, or just a line on a drawing. Plans can be wrong. Floors are what they are.
This does not replace a proper survey. It tells me whether to pay for one before I firm up a price. That is part of what a commercial buyers agent does: doing this checking on the buyer's side.
Rent per square metre on the real area
Face rent is the rent written in the lease. Passing rent is what the tenant is paying right now. Neither is the full story until you take out outgoings, allow for vacancy and adjust for any incentives. The passing rent vs net income guide walks through that. This article is about the area side.
Rent per square metre is just the rent divided by the area. So the area you use changes the answer.
Here is an example with round numbers, for illustration only. Say the rent is $100,000 a year.
- On the flyer's 1,000 square metres, that looks like $100 per square metre.
- On the real 800 square metres of GLA, it is $125 per square metre.
Same rent, same building. But at $125 the rent might look high for the area, which changes how safe that income is and what the building is worth. My order is: take the rent from the signed lease, check which area the lease names, redo the rent per square metre on the surveyed or completed area, then look at incentives and outgoings.
Cap rate on a full building vs one still filling up
A cap rate (capitalisation rate) is the net yearly income divided by the price. Buyers use it to compare deals. Capitalisation rate for buyers covers the maths. The area feeds straight into it, because it shapes both the income and how much might sit empty.
A fully leased warehouse on clean GLA is where a cap rate works well. The income is checked, the costs passed on to the tenant are mapped, and the lease length is firm (see how to calculate WALE).
It is different when a building is still filling up with tenants, or when the flyer counts rooms that were never built. If the flyer applies a cap rate to "full" income on a number that includes canopy or unbuilt space, you are paying for space nobody can rent. In that case I would rather map out how and when the space fills, at a realistic rent on the real area. That is closer to a discounted cash flow (DCF), which values the income year by year, than to one cap rate on a flyer total. Either way, I fix the area first.
My quick check before I price a deal
Before I put a rent per square metre or a cap rate into an offer, I:
- Name the measuring method. GLA for industrial and showrooms, NLA for offices.
- Match the flyer area to the survey and the completion documents.
- Take out canopy, hardstand and any approved rooms that were never built.
- Redo the rent per square metre on the real area.
- Rebuild the income to a true day-one net figure using the passing rent steps.
- Check who pays the outgoings with gross lease vs net lease and triple net.
- Decide honestly whether a cap rate fits, or whether the building is still filling up.
If the seller cannot answer the area questions, the flyer numbers stay unconfirmed. The full order of checks is in commercial property due diligence.
Next step: the commercial Ready Check
If you are moving from residential into commercial property, start with the commercial Ready Check at go-commercial. It looks at your capital, how much income you need and how much risk you are comfortable with. Bring the area schedule, the lease wording on lettable area, any completion certificates for extensions, the rent roll and any yield or cap rate figures the agent gave you. If all you have is a flyer total or a DA figure, that is the first gap I close before anyone talks about price per square metre.
Frequently asked questions
What is GLA on commercial property in Australia?
Gross lettable area (GLA) is the floor space inside a tenancy that a tenant leases. It is the Property Council of Australia measure for warehouses, industrial buildings, freestanding supermarkets and showrooms. It is not the same as a flyer's building size.
Is building size the same as GLA?
Not always. Building size measures the whole building. A flyer figure can also include canopy, yard or a rounded number that does not match the lease.
Is marketing NLA the same as the area that was built?
Not always. Marketing net lettable area (NLA) can include rooms that were approved by council but never built. I use the finished area in the lease or survey, and treat unbuilt approved space as a future maybe.
Are canopies and awnings included in GLA?
Usually not. The measuring method leaves out awnings and covered areas, and surveys usually leave out canopies and open loading docks too. Check the area schedule for the building you are buying.
When is a cap rate the wrong tool?
When the flyer applies it to full income on a number that includes canopy, yard or unbuilt rooms. Fix the area first, and only use a cap rate on income you can back up from day one.
General information only. Not personal financial advice. Measuring methods, lease wording, completion documents, rents, cap rates and outgoings vary by building, state, survey method and valuation approach. Property outcomes depend on your brief, capital, timing and the asset. Seek licensed professional advice for your situation before acting. Individual results vary.
