Why Test Fits Deceive Even Experienced Occupiers
A test fit is a preliminary floor-plan study that shows how a tenant's program could occupy a given building floor. Landlords commission them to demonstrate value, and they deliver them free of charge during the competition phase. The problem is that two test fits from two different buildings rarely share the same design assumptions, the same program interpretation, or the same efficiency metric — making a direct side-by-side comparison almost impossible without deliberate normalization.
Establishing a Uniform Program Brief Before Requesting Any Plans
The first corrective step is to define a single, written program brief before you ask any landlord to commission a test fit. That brief should specify headcount by department, targeted seats per person (or desk-sharing ratio where applicable), private offices by seniority tier, conference rooms by size category, and all support spaces — copy areas, server rooms, mothers' rooms, phone rooms, and similar. Without a shared baseline, each landlord's architect will interpret the program differently, and the resulting plans will reflect those interpretations rather than your actual needs.
The brief should also state the target seats-per-square-foot density and any non-negotiable adjacencies — legal adjacent to the C-suite, trading adjacent to compliance, and so on. Adjacency failures are hard to price but easy to see on a plan, and they eliminate buildings that look competitive on a per-square-foot basis but cannot physically accommodate the organization's workflow.
Circulate the brief to every competing landlord at the same time, in the same format, with a shared deadline. This synchronization is not merely procedural — it eliminates the common situation where the first landlord to deliver a plan shapes the conversation and anchors the client's spatial expectations before the other options are even studied.
The brief should also specify the measurement standard you expect each architect to use. BOMA 2017 (Building Owners and Managers Association) is the most common commercial standard in the United States, but older leases and older buildings often carry rentable area calculations under BOMA 1996 or other methods. Requiring all plans to certify the rentable area under a named standard is a prerequisite for any honest cost comparison.
Understanding Loss Factors and Usable-to-Rentable Conversions
Loss factor is the ratio of rentable square feet to usable square feet, typically expressed as a percentage add-on called the load factor or the rentable-to-usable (R/U) ratio. If a floor contains 20,000 rentable square feet and 17,000 usable square feet, the load factor is approximately 17.6 percent. The practical implication is that a tenant paying for 20,000 rentable square feet has 17,000 usable square feet to actually fit furniture, walls, and people.
Buildings in the same submarket can carry meaningfully different load factors. A multi-tenant floor with shared core elements — lobbies, elevator banks, restrooms, mechanical rooms — will carry a higher load factor than a single-tenant floor where the tenant controls the full plate. High-rise buildings with deep core elements routinely carry load factors of 20 to 25 percent. Boutique or low-rise buildings sometimes reach 12 to 15 percent. These are real, documented ranges, not invented figures, and they translate directly into how much rent you pay for each desk chair.
When comparing two buildings at the same quoted rent per rentable square foot, the building with the lower load factor delivers more usable area for the same dollar. A hypothetical example: Building A quotes $60 per rentable square foot with a 22 percent load factor, implying a usable cost of approximately $76.90 per usable square foot. Building B quotes $63 per rentable square foot with a 14 percent load factor, implying a usable cost of approximately $73.26 per usable square foot. Building B appears more expensive at the lease line but is actually cheaper on a per-usable-foot basis.
Sophisticated occupiers always convert quoted economics to a cost-per-usable-square-foot and then to a cost-per-seat before making any comparison. The seat is the unit of productive capacity; the rentable square foot is the billing unit. Aligning these two figures is the foundation of any credible facility-planning analysis.
Reading the Efficiency Percentage on Each Test Fit
Every architectural test fit should include an efficiency percentage — sometimes called the program efficiency or the net-to-gross ratio. This figure represents the percentage of the usable area that is allocated to programmed workstations and offices, versus the area consumed by circulation, walls, columns, and unusable shapes. A floor plan that shows 85 percent efficiency has captured most of the plate for productive space; one that shows 65 percent has not, and the gap is a direct cost the tenant bears.
Efficiency percentages vary by building shape, by column grid, by window module, and by the tenant's program. Open-plan programs typically achieve higher efficiency on regular, wide-bay floors. Private-office-heavy programs lose efficiency quickly on shallow floors where the depth from core to window is too shallow to stack a private office, a corridor, and a second row of workstations. Irregular floor plates with curved facades or angled setbacks routinely underperform regular rectangular plates by five to ten efficiency points.
When a landlord delivers a test fit without an efficiency percentage, ask for it explicitly. If their architect cannot or will not calculate it, have your tenant-rep adviser's architect calculate it from the plan. The calculation is straightforward: divide the total programmed area (workstations plus private offices plus collaboration spaces) by the total usable area of the floor, and express the result as a percentage.
Comparing efficiency percentages across buildings gives you the most direct signal of which floor plate is working hardest for your program. A five-point efficiency gap on a 50,000-rentable-square-foot lease at $60 per usable square foot is a material number over a ten-year term. Never allow a conversation about which building looks nicer or which lobby is more impressive to substitute for this arithmetic.
Normalizing Headcount Capacity Across Competing Plans
Once you have efficiency percentages in hand, the next step is to calculate the seat count each plan actually delivers. Have your adviser extract the total workstation count, private office count, and ancillary collaboration seat count from each test fit — not from the landlord's summary sheet, but from the plan itself. Summary sheets often count seats differently, grouping phone rooms or flex tables in ways that inflate the apparent capacity.
After extracting the actual seat count from each plan, calculate the cost per seat across the lease term. Use the total occupancy cost — base rent plus operating expenses plus any above-standard utility costs, net of concessions — divided by the seat count, expressed annually and in present-value terms over the lease duration. This is the number that tells a CFO what each desk actually costs the organization.
Seat counts also interact with headcount growth projections. If your program calls for 300 seats today with a 20 percent growth buffer, you need 360 seats available within the leased area. Some buildings deliver 300 seats in a test fit but cannot add 60 more without taking an expansion option on a second floor, changing the entire economics of the deal. Others fit 380 seats comfortably in the original footprint, giving organic growth room without a lease amendment.
Document the growth capacity in each test fit explicitly. The question to answer is not "how many seats does this plan show today?" but "what is the maximum seat count this floor plate can achieve within the leased area, and at what efficiency penalty?" Answering that question for each competing building puts headcount growth on the same analytical plane as day-one rent.
Applying a Consistent Construction Cost Assumption
Test fits from competing landlords will typically reflect different tenant improvement (TI) allowance levels, and they may also reflect different design standards — one landlord's test fit may assume demountable glass fronts on private offices while another assumes drywall. Those design differences carry significant construction cost implications, and they must be normalized before you can compare the economic packages.
The most reliable normalization method is to take all three or four test fits to a single construction estimator — typically a general contractor with current fit-out pricing in the relevant market — and ask for a consistent budget estimate using a defined specification level. That specification level should match your actual intended build-out standard, not the most expensive option in any landlord's proposal. The result is a set of construction budgets that reflect the actual geometry of each floor plate, rather than varying architect assumptions.
After normalizing construction budgets, compare them against each landlord's TI allowance. If Building A offers $120 per rentable square foot in TI and the normalized build-out estimate is $140 per rentable square foot, the tenant has a $20-per-foot gap to fund. If Building B offers $100 per rentable square foot and the normalized build-out is $105, the gap is only $5. Building A's gap is larger in absolute terms but may still represent the better deal depending on base rent and lease term length — which is exactly why the gap must be carried into the lease NPV model, not evaluated in isolation.
TI allowances are only one element of the construction economics. Free rent periods, early access for construction, landlord-managed versus tenant-managed construction, and hard-cost caps on landlord construction contributions all affect the total capital picture. Each of these variables should appear as a line in your economic comparison, normalized to its after-tax, net-present-value equivalent.
Building the Equal-Terms Financial Model
The financial comparison that sits behind a test fit evaluation is typically a lease net present value (NPV) model — sometimes called a true cost analysis or a net effective rent analysis. The goal is to express every competing proposal as a single, comparable number: the present value of total occupancy cost over the lease term, reduced by the present value of concessions received.
The model should include base rent escalations, operating expense base year and estimated gross-up, TI allowance timing (when the cash is received relative to the lease commencement), free rent periods, moving allowances, any above-standard building charges, and the cost of any options (renewal, expansion, contraction, termination) expressed as probability-weighted adjustments. Each of these inputs must come from the actual letter of intent (LOI) or proposal, not from a landlord's verbal summary.
The discount rate used in a lease NPV model is a question of organizational policy and deserves explicit documentation. Some corporate real estate teams use the company's weighted average cost of capital (WACC); others use a risk-free rate plus a spread; others use the organization's internal hurdle rate for real estate decisions. The specific rate matters less than applying the same rate to every competing proposal. A five-year lease analyzed at 6 percent discount rate versus 8 percent discount rate can produce materially different NPV rankings — another reason why a shared modeling template, with shared inputs, is not optional.
Scoring Non-Financial Criteria Without Losing Discipline
Lease economics are the dominant decision variable for most occupier transactions, but they are not the only variable. Location access, building quality, landlord creditworthiness, transit proximity, floor plate regularity, natural light distribution, infrastructure capacity (power, cooling, generator backup), and amenity profile all affect the total value of a space. These factors need to be scored, not just described.
A weighted scoring matrix assigns each non-financial criterion a weight proportional to its importance to your organization, then scores each building against each criterion on a consistent scale — typically one to five or one to ten. The weights must be agreed before the scores are assigned, not after. Post-hoc weight adjustment to make a preferred building win is a common and costly failure of the process.
The scoring exercise should involve the actual end users — not just the real estate team. Facilities, HR, IT, and operations all have legitimate stakes in the outcome, and their criteria will differ from the adviser's criteria. A trading floor operation prioritizes generator capacity and raised-floor infrastructure; a creative agency prioritizes natural light and ceiling height; a legal practice prioritizes proximity to courts and document storage. Building the matrix collaboratively ensures that the final score reflects the organization's actual priorities rather than the adviser's default template.
After running the weighted score, overlay it against the NPV comparison. A building that scores highest on non-financial criteria but carries a materially higher NPV cost may still be the right choice — but the decision-maker should know the premium they are paying for those qualitative attributes, expressed in present-value dollars, before they sign.
Running the How to Compare Test Fits From Competing Landlords on Equal Terms Checklist
The phrase "How to Compare Test Fits From Competing Landlords on Equal Terms" describes a specific analytical discipline, not simply a review of floor plans. The checklist that operationalizes this discipline has a defined sequence: program brief issued uniformly, measurement standard specified, test fits received, loss factors extracted and normalized, efficiency percentages calculated, seat counts extracted from plans, construction budgets normalized by a single estimator, TI gaps calculated, full lease NPV models built on shared assumptions, and weighted non-financial scores completed before any LOI is submitted.
The sequence is important because each step depends on the one before it. You cannot normalize construction budgets before you know the actual square footage under a consistent measurement standard. You cannot calculate cost per seat before you have both the normalized seat count and the normalized total occupancy cost. Skipping or reordering steps produces a comparison that looks rigorous but contains embedded inconsistencies that will only surface after the lease is signed.
Assign an owner to each checklist item. In a typical tenant-rep engagement, the adviser's team owns the program brief, the measurement normalization, and the financial model. The tenant's project manager owns the construction estimating coordination. The tenant's IT and facilities teams own the infrastructure scoring criteria. Without named ownership, items stall.
Handling Landlord Pushback on Standardized Comparison
Landlords sometimes resist the standardized comparison process because it eliminates the ability to present their building in its most favorable light. A landlord whose building carries a 24 percent load factor has a clear incentive to keep the conversation at the rentable-square-foot level rather than the usable-square-foot level. Understanding where resistance will come from — and how to address it professionally — is part of the tenant-rep adviser's role.
The most common form of resistance is the alternative test fit: a landlord who, upon seeing that their initial plan shows lower efficiency than a competitor's, commissions a revised plan with a denser or more creative layout. Revised test fits are legitimate and should be accepted — but only if the same architect and the same design assumptions are applied to all buildings. If one building gets a second bite at the apple, all competing buildings should.
The second form of resistance is selective concession revision. A landlord may respond to a poor NPV ranking by improving one element of the economic package — increasing TI, for example — without disclosing whether the base rent or other terms have changed. Any revised proposal should be run through the full model, not just compared on the revised line item. Only the full NPV comparison tells the true story.
Coordinating the Comparison Across a Multi-City Portfolio
Organizations with multiple simultaneous real estate decisions face a layered version of this problem. The same methodology applies at the building level, but portfolio-level decisions require an additional layer of analysis: how do the occupancy costs across all locations interact with each other, and what is the total present-value cost of the portfolio under each set of local decisions?
Facility-planning decisions at the portfolio level also interact with lease horizon management. If two markets have leases expiring in the same quarter, the organization may have more leverage in one market than the other depending on local vacancy rates, and the timing of each market's decision affects the other. A corporate real estate team managing simultaneous decisions in multiple markets needs a shared framework for surfacing these interdependencies before they affect negotiating leverage.
Validating Test Fits Against Actual Construction Documents
A test fit is a planning document, not a construction document. The column locations shown on a test fit may be schematic; the floor-to-ceiling heights may be assumed rather than measured; the window mullion spacing — which drives private office module widths — may be drawn at the wrong dimension. Before an LOI is executed, the test fit assumptions should be validated against the building's architectural drawings or, where drawings are unavailable, against a physical survey.
Column intrusion is a frequent source of test fit error. A plan that shows a clean private-office row along an interior wall may ignore a column that projects into the office, reducing the net usable depth of that office below code or below the organization's minimum size standard. Discovering this after lease execution leads to either a redesign that reduces seat count or a construction cost premium to work around the structural element.
Window module validation matters for private office programs in particular. If the design intent is one private office per window module, the actual window mullion spacing — not the spacing assumed by the architect — determines how many private offices the building delivers. A floor plate that appears to yield 40 private offices in a test fit may yield only 35 when the actual mullion spacing is confirmed, with significant downstream effects on the headcount capacity comparison.
Structuring the Decision Memo
The final deliverable of the test fit comparison process is a decision memo addressed to the executive or committee who will authorize the LOI. That memo should present the competing buildings in a consistent format: normalized test fit summary (usable square footage, seat count, efficiency percentage), construction cost gap, lease NPV comparison, weighted non-financial score, and a recommended path with a stated rationale.
The memo should explicitly document every assumption that was normalized — the measurement standard, the construction specification level, the discount rate, the gross-up percentage — so that the decision-maker can challenge any assumption they consider inappropriate for the organization. A decision memo that does not expose its assumptions is not a decision document; it is a recommendation without accountability.
For teams where the decision-maker is not embedded in the day-to-day process, this creates a durable record that can be reviewed during diligence, audit, or subsequent lease renewal planning.
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