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What is Gross Area?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 30 October 2016
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    Conjecture Corporation
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Also known as gross floor area, gross area is a term used to describe the complete area of floor space within a building. This includes both open and usable space as well as areas that are closed or currently unusable for one reason or another. The purposes for identifying gross area vary, but often have to do with restructuring the layout of the interior space or as part of an assessment in preparation for offering the structure for sale. The amount of space or area involved is also often important when it comes to paying property taxes associated with the facility.

Companies often consider gross area when thinking about a redesign of a production floor or an office layout. Here, the idea is to look beyond the current configuration and use a fresh approach to deciding how to arrange the essential components for the area to best advantage. Under the best of circumstances, this means the new layout will increase productivity and efficiency, while also allowing the business to make a more responsible use of such features as natural sunlight, ventilation and the heating and cooling systems already present in the structure.

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In a more limited application, gross area is also sometimes defined as the amount of interior space that is equipped for heating and cooling. With this approach, any areas of the building that are not maintained directly accessible to air conditioning or heating systems would not be accounted for in the calculation of total floor area. This is sometimes the more common approach when the idea is to sell the property, since it makes it possible to inform potential buyers of how much of the space is likely to be usable throughout the calendar year for something other than storage.

Along with determining gross area for purposes of redesigning operational layouts or preparing the building for sale, accurately calculating the gross area is also often important to determining the amount of property and other taxes that must be paid to local and national tax agencies. Determining which definition of gross area is used by the tax agencies involved is essential when it comes to reporting an accurate figure on the relevant floor space. A gross area calculation that exaggerates the true amount of floor space within the facility will often lead to paying more taxes than are actually owed. At the same time, underestimating the gross area may result in a lower tax assessment in the short-term, but could lead to significant tax penalties once the error is discovered.

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