So, just how big is your building? Did you know that your property could shrink or grow in size simply depending on where it is located?
Historically, commercial property has been measured differently throughout the world. According to research by global property giant JLL, depending on the measurement standard used, the area quoted in different markets for an equivalent building could vary by as much as 24 percent. These inconsistencies have led to confusion in markets, prompting many companies to develop their own costly processes for measuring their property assets. Investors, too, have had to factor in variation in quoted property size when making decisions about acquiring new property globally.
In May of 2013, leading professional and non-governmental organizations from around the world met to discuss the development of a principle-based standard for the way buildings are measured globally. At that meeting, BOMA International joined with the Appraisal Institute, the Australian Property Institute, the Council of European Geodetic Surveyors, the International Consortium of Real Estate Associations, the International Monetary Fund and the Royal Institution of Chartered Surveyors to sign a declaration to become a member of the International Property Measurement Standards Coalition (IPMSC). Since then, the IPMSC has grown to more than 60 member organizations representing every major market around the world. BOMA and our coalition partners believe that the implementation of a global property measurement standard would create consistent measurement, increase global financial stability, facilitate more accurate and consistent financial reporting and increase investor confidence and transparency in the marketplace.
In August of 2013, the IPMSC selected 18 real estate experts from around the world to form a Standards Setting Committee to develop a series of global standards for measuring various property types. The Standards Setting Committee includes academics, real estate fund and asset managers, residential professionals, valuers and specialists in development and construction with first-hand knowledge in 50 countries across five continents. The committee acts independently, and is tasked with the job of drafting and consulting industry on a global standard measurement methodology.
The first project for the IPMSC’s Standards Setting Committee was the International Property Measurement Standard (IPMS) for Office Buildings, which was presented for public comment and completed on November 24, 2014. The Committee currently is working on the IPMS for residential property, and IPMS for industrial property and IPMS for retail property will round out the series of new global measurement standards. BOMA International’s Board of Governors voted to adopt the new standard during the association’s annual Winter Business Meeting this past January.
BOMA often is asked why we adopted the new IPMS for Office Buildings when the BOMA Standard (Office Buildings: Standard Methods of Measurement - ANSI/BOMA Z65.1—2010) is the prevailing standard in the U.S. and many countries across the globe. The simple answer is that the IPMS for Office Buildings measures the building (gross area), while the BOMA Standard measures rentable area. For example, the IPMS for Office Buildings does not include gross-up or load factor, meaning there are no calculations for proportionately sharing common areas, and therefore would not be used for leasing purposes in North America, except perhaps in a single occupant building.
The IPMS for Office Buildings consists of three distinct measurement methods, known as IPMS 1, IPMS 2 and IPMS 3. IPMS 1 is used for measuring the total area of a building on a floor-by-floor basis, including external walls, and is primarily intended to be used for building planning and development purposes. IPMS 2 calculates the inside finished perimeter measurement, known as the Internal Dominant Face. IPMS 3 is used for determining the areas of a building used exclusively by occupants, but excludes all common areas and other service areas that do not change frequently over time.
BOMA believes that the IPMS for Office Buildings is compatible with and complements BOMA International’s current office standard, and that the IPMS for Office Buildings will be used primarily overseas and by global investors in real estate, while the BOMA standards will continue to be used for leasing transactions. However, there are some minor inconsistencies between the two standards, requiring BOMA International’s Floor Measurement Standards Committee to revise BOMA’s office standard to integrate the measurement methods found in the IPMS for Office Buildings. Work is expected to be complete on this revision by the end of the year.