Commercial real estate can be tricky, especially when it comes to understanding measurement standards like those set by the Building Owners and Managers Association (BOMA). These measurements are essential for determining rentable areas within office buildings, ensuring all parties enjoy a clear and fair leasing process. Both property owners and tenants benefit from grasping the basics of BOMA measurements, as they influence negotiation terms, rental rates, and space utilization.
Over time, BOMA standards have adapted to meet industry demands and offer a reliable framework for measuring office spaces. This consistency allows for accurate property comparisons, impacting everything from leasing agreements to building management and financial planning. By understanding how BOMA calculates rentable square footage, stakeholders can make informed decisions, optimize space, and adhere to industry norms.
So, what exactly do BOMA measurements involve, and how do they play into leasing agreements? Whether you’re an experienced property manager or a tenant exploring options, knowing the ins and outs of these standards arms you with knowledge to navigate the commercial real estate market confidently. Let’s uncover the key aspects of BOMA measurements and why they matter in your leasing agreements.
The Evolution of Measurement Standards
The standards used in BOMA measurement have a rich history that dates back to 1915, when the first guidelines were introduced to create uniformity in measuring office spaces. Over the decades, these standards have evolved significantly to keep pace with changing architectural designs and market needs.
The BOMA 2010 Office Standard, for instance, introduced the concept of dominant portion to improve clarity in measurements. Later, the BOMA 2017 Office Standard incorporated technological advancements, such as CAD software, to enhance measurement accuracy. Understanding this evolution highlights the industry’s commitment to precision and fairness, making BOMA standards the gold standard in commercial real estate.
Usable vs. Rentable Square Footage
Usable square footage includes the tenant’s private space—think offices, conference rooms, and storage areas. However, rentable square footage extends beyond this to incorporate a share of common areas, such as lobbies, hallways, and restrooms. This allocation of shared spaces is critical because it ensures tenants contribute fairly to the upkeep of the entire building.
Example: If a tenant occupies 10 percent of the total usable area, they might also cover 10 percent of the common areas, influencing their total rent. Clear definitions provided by BOMA help all involved avoid misunderstandings and disputes over lease terms.
Measurement Methods
BOMA offers two primary methods to calculate square footage: Method A (Legacy Method) and Method B (Single Load Factor Method).
Method A The legacy method calculates the rentable area by apportioning shared spaces based on their floor location, which can result in varying load factors for different floors.
Method B The single load factor method simplifies this by, as its name implies, applying a single load factor across the entire building. This makes it easier for tenants to understand their share of common areas.
Suppose a building has multiple floors with diverse layouts. In that case, Method B provides a more straightforward approach by using a uniform percentage, thus promoting transparency and simplicity in lease agreements.
The Importance of Accurate Measurements
For tenants, obtaining precise measurements ensures they aren’t overcharged for space they don’t actually occupy. Imagine leasing an office and later discovering you’re paying for an extra 200 square feet you never use.
On the landlord’s side, accurate measurements help set rental rates that reflect the true value of the space, which enhances property appeal. Miscalculations can lead to disputes, potential legal issues, and a tarnished reputation, which is why accuracy is non-negotiable in commercial leasing.
The Impact on Rental Rates
Rentable square footage, derived from BOMA measurements, directly affects how much tenants pay. If a property has extensive common areas, like luxury lobbies and expansive corridors, the rentable square footage will be higher, resulting in higher rental rates.
Conversely, buildings with minimal common areas might offer more competitive pricing. Understanding this relationship helps tenants evaluate whether a property provides good value for money while assisting landlords in justifying their rental rates. Transparency in how these rates are calculated fosters trust and can make properties more attractive to potential tenants.
Lease Negotiations
Armed with knowledge of BOMA measurements, tenants can negotiate leases more effectively. For instance, a tenant who is aware that a property uses Method B can better understand their share of common areas and argue for adjustments if the load factor seems unreasonable.
Landlords, too, can leverage BOMA standards during negotiations, emphasizing the accuracy and fairness of their measurements. Highlighting compliance with these industry-standard measurements can reassure potential tenants that there won’t be hidden costs or discrepancies.
Compliance and Industry Standards
Many commercial leases explicitly require BOMA-compliant measurements. Properties measured according to BOMA standards often enjoy enhanced reputations, attracting high-quality tenants who appreciate the transparency and fairness these standards provide.
Furthermore, compliance with BOMA measurements can mitigate legal risks, as these standards are widely recognized and accepted in legal proceedings involving lease disputes.
Space Optimization
By providing clear definitions of usable and common areas, property managers can design layouts that maximize efficiency and tenant satisfaction. For example, knowing the exact measurement of common areas allows for strategic placement of amenities, such as break rooms or collaborative spaces, enhancing the tenant experience.
Efficient space utilization can lead to higher occupancy rates and increased property value. Well-defined spaces also enable better planning for future renovations or expansions, ensuring that every square foot contributes to the property’s overall functionality and appeal.
Now That You Know…
As you begin your endeavors in the commercial real estate world, BOMA measurements offer a beacon of clarity and trust. These standards aren’t just technical guidelines; they are tools that can help you navigate every aspect of leasing agreements with confidence. They ensure that both tenants and landlords enter transactions with a mutual understanding, fostering a transparent and fair environment.
Consider the benefits beyond mere numbers. As a tenant, knowing you’re paying for exactly what you occupy brings peace of mind. If you’re a landlord, presenting properties with well-defined measurements enhances your credibility and attracts quality tenants. This mutual transparency reduces disputes and builds stronger, more lasting relationships.
By leveraging BOMA measurement standards, you position yourself for more fruitful leasing agreements and a more reputable presence on the market. Whether you’re stepping into a new lease or reworking an existing one, let these measurements guide you on the path to optimal outcomes.