It's important to look at many aspects when deciding what to offer, and square footage is one of them, but not the only one. Someone else didn't care about that aspect, they wanted it for other reasons, reasons which may not have been at all important to you. Maybe they had friends in the same building, maybe it had the perfect location for their business, maybe they liked the decor. There are 1,000 possible reasons why sf wasn't important to them, but it is important to you, so it was a good decision for you not to raise your bid. There is something else out there for you waiting to be found, so keep looking for it.