7, 2011 in the COLORADO REAL ESTATE
Landlords, Tenants Must Take Care When Applying BOMA Standards
by Tia Jenkins
I RECENTLY READ THROUGH one of those notoriously dry white papers on the many nuances of floor area measurements in office buildings. This particular one noted that Russian building owners play fast and loose with the standards they choose to apply. "Some building owners in Russia totally ignore the BOMA method and invent their own rules for area measurement which are profitable for them," the text stated. "But they call it the BOMA standard to avoid tenants' questions."
Unethical? Misleading? Maybe.
But U.S. building owners have been doing the same thing for years. There are no BOMA "police," no governing bodies to enforce this or any other standard. So why then has there been so much resistance to using the BOMA methodology?
First, most buildings new and old have been measured at some point using CAD-drafted original construction documents. It is likely that this documentation is more accurate and reliable than field measurements which utilize tape measures, lasers and other devices. In fact, BOMA recognizes that those latter methods can vary as much as two percent due solely to human error.
Second, BOMA calculation methods have evolved since they were first developed in 1915, and they remain fluid. It is not uncommon for a building measurement to change each time a new BOMA standard is released. This is largely due to the fact that both existing and new methods are subject to interpretation, and consequently, potential miscalculations and even misclassifications of space.
The 1996 version, for example, was confusing and open to constant "modification" because it lacked flexibility when building conditions changed--such as a full floor tenant space converted to a multi-tenant layout. The new 2010 BOMA standards introduced a single load factor to be used as an allocation of additional square footage for "service" areas: building lobbies, utility rooms, restrooms, etc. These types of spaces are necessary for operations, but not available for lease. The "R/U" or Rentable /Useable factor is the method of calculation used to determine the leasable square footage. The method outlined in the new standard simplifies calculations since it can more easily accommodate both multi-tenant and single tenant configurations.
Still, building owners ask how a recalculation using the new standard can specifically benefit their leasing efforts.
The quick answer is that the 2010 methodology simplifies the measurement process, especially in buildings where floor functions can change from single-tenant to multi-tenant. On the other hand, applying the new standard could actually decrease the building's rentable square footage. What building owner would promote that?
If you're a landlord, perhaps the better question to ask is what happens if your building is not measured according to the 2010 BOMA standard? Some government, institutional and large corporate users mandate the use of the most recent standard in their lease language.
This is where there can be no ambiguity from the landlord's perspective as to what standard is being applied. On the other hand, if the building owner chooses to modify the method, it is best to leave BOMA out of the discussion and clearly state just how spaces are being calculated. The building owner here must represent the measurement method used for the lease so the tenant can reasonably compare different spaces and buildings.
In reality, it is this perpetual discrepancy in calculations that ultimately causes most of the variations in space measurements. At the end of the day, the primary decision for tenants to lease one space over another should be made by comparing the cost of the space and its amenities, not by its size.
The 2010 BOMA methodology offers a better, simpler way to measure buildings, especially new properties or those in which ownership is changing hands, provided that a recalculation is even included in the lease language. But methods of measurement will likely always be flexible, and subject to interpretation. Both landlords and tenants should always be aware of that.