The 700 HP is known as the connected load. For initial estimating purposes it is easier to use what you have done to determine the motor reject heat load into the room
If the ACTUAL load is for example, 635 HP, the reject heat load into the room is 31.75 HP (0.05 x 635). You should know what the actual load is. Just make sure that whether you are trying to do heating or cooling calculations your equipment has adequate turn down capabilities. The biggest mistake is to oversize things. It is better to have multiple pieces of equipment that can be brought on line to get better control and flexibility.