Canada's Condominium Magazine

New office space measurement standard removes bizarre quirks

Imagine that your company planned to open an office in Hong Kong and you decided that you needed, say, 6,000 square feet of space to start with. Your Hong Kong commercial real estate agent does a search and tells you he has found the perfect building, with a lovely office that overlooks the building’s bright, airy central atrium. Excited, you fly out to the Chinese city to inspect it and sign the papers, but on looking at the space you have the uncomfortable feeling that it isn’t quite as large as you had expected. The real estate agent assures you that it is exactly 6,000 square feet, showing you the description of the property from the management company representing the owner. But when you do a few quick measurements of your own, the space comes up well short. Yes, says the agent, but you must include the lobby, and the stairways, and the columns holding up the building, and the elevators, and the washrooms and the void atrium space on the other side of the windows. “I’m not paying to rent empty space in an atrium,” you protest, “nor for the lobby and the elevators. I’m paying for office space!”

And there you have a somewhat over-simplified illustration of a problem that has now, hopefully, been solved: how to measure buildings and office space across international borders so that everyone is speaking the same language. Realtors, property managers, vendors, renters, and purchasers of commercial real estate now have International Property Measurement Standards (IPMS) to guide them in this. The standard has the support of a broad coalition of international property associations that includes the Building Owners and Managers Association (BOMA), the Real Property Association of Canada, the Royal Institution of Chartered Surveyors, and the Council of European Geodetic Surveyors, and about fifty-five other groups from around the world.

The purpose of the standard is to provide transparency, to enable buildings to be measured and the measurements provided “on a transparent basis” to promote market efficiency. Everyone will be speaking the same language. Terms like rentable, usable, leasable, net internal, net lettable, and carpet area, mean different things in different markets. They will be standardized or made unnecessary. An identical space that is described as having 50,000m2 in one market could be listed elsewhere as having 60,000m2. According to the coalition, the variation in measurements between markets can be as high as 24 per cent. The new standards will help to remove that kind of huge discrepancy.

offoce-space-rental-measurement-BOMA-RICS-REALPac-commercial-real-esate-Condo.ca
Graphic illustration of the differences in measurement standards. The yellow area represents what is included in the definition of office space according to the Royal Institution of Chartered Surveyors. It includes only actual office space. At the other extreme is the orange area, representing the Hong Kong measuring standard and including elevators, stairs, columns, external walls, washrooms and common parts. Source: IPMS

So, the definition of “office” for the purposes of asset, facility and property managers, brokers, building owners and evaluators is now the sum of the areas of each floor level of an office building measured to the internal dominant face (the inside finished surface) and includes internal walls, columns and enclosed walkways or passages between separate buildings.

It’s the list of items that are not included in the definition that really points to how bizarre measurement systems have been until now in some places. Not included are light wells and the upper levels of an atrium (the void), patios and decks at ground level that are not part of the building’s structure, external car parking, equipment yards, cooling equipment and refuse areas, and other ground level areas not fully enclosed.

There is a different definition of “office” for the individual occupiers of exclusive-use space on each floor of the building. It is measured in much the same way as a residential condominium in Toronto: the floor area to the internal dominant face and to the centre-line of common walls. Balconies have to be measured and stated separately. “Standard facilities” (corresponding to “common elements” in a condo) are not included.

And again, the fact that the standard now excludes stairs and escalators and cleaners’ cupboards from the definition of an office shows how necessary this all is.

A Canadian representative of the IPMS coalition, John Hughes, told Canadian Property Management that the new standard will be especially valuable to large international investors like Canada’s big pension funds, which have enormous portfolios of international real estate. “If you are reporting on a portfolio of properties that are spread around the globe, you can be confident that it is done consistently,” he said.

Some of the anomalies that the IPMS standard will help to eliminate include:

  • In India, off-site areas such as car parking and common areas can be included in office space.
  • In some parts of the Middle East, floors not yet built but supportable by existing foundations can be included.
  • In some countries, only air-conditioned space is included.
  • Measurement variations due to inconsistent standards can be as high as 24 per cent, meaning that capacity for staff is much less than expected.

SHARE WITH US

Subscribe to condo.ca

@ 2017 condo.ca  |  Designed by Persona Corp