Mark Rauch's Tenant Rep Times

Measuring Office Space
Presented By Mark Rauch

A direct and large financial component in your evaluation is the exact formula the landlord uses at each building to measure the office space. The usable area is simply that area if the building within the confines of your demising walls and exterior; no fancy explanation. While there may be some differences about space occupied by a large group of pillars, deep air conditioning units at the window, vertical penetrations such as elevator shafts and duct, and without dwelling on the minutia of this, the usable space is that area which you will occupy and use.

Building owners got smart years ago when they leased whole floors to tenants who "used" the whole floor. Then when they had to break up floors for multi-tenants and add corridors, they added up the usable again of the remainder of the space and, low and behold, they had less usable area. The area to lease got smaller; the rent was the same so the landlord got less money. Not for long! For many years there were as many different measurement styles as there were landlords. To standardize, (there's that word again, but in this case its good) the Building Owners and Managers Association developed a set group of measurement criteria that ideally could be uniformly used on any building. This method is published by BOMA as the American National Standard Method for Measuring Floor Area in Office Buildings. Of course the rouge landlord may still measure to the corner drug store, but now the Tenant has ammunition too.

Your architect will immediately be able to determine the usable, no problem. With that in hand you need to determine what the "load factor" is in the building; that percentage increase to account for the proportionate share of common areas. Do not take the quoted load factor (known in some cases by its reverse calculation, "Effeciency") for gospel. Some landlords may use the wrong number or make one up to fit the market. Some agents will tell you to negotiate it. Well, without a yard stick or knowledge where it should be, you're just guessing. No guessing! Indicate to the landlord that you assume that the BOMA measurement applies in the building. Only a foolish landlord would answer no (or an uninformed one, but that's to your advantage). Then simply follow the example of the BOMA method to determine the REAL rentable. If your number is higher than the landlord's, shut up, if lower you have a bona fide case to dispute his accuracy. In this case, indicate that you are prepared to move forward with the building only if the measurement (which multiplied by your rate you have negotiated) is fixed by your calculation or that you may disqualify the building.

In some egregious cases, the Landlord can add up all the "rentable" square footages on the lease documents in his building and actually arrive at a total square footage larger that the building itself.

The difference between rentable and usable is also referred to as the "rentable-to-usable ratio", which is important to consider when you are boiling all of this down on your financial analysis which will back-calculate what each building is actually costing you on a usable basis for net-net comparisons. Some buildings will seem cheaper at the rental rate than others at face value, but catching the measurement differences may add up to costing more in the end analysis.