If your property isn’t measured according to current commercial building measurement standards, you might be sitting on a leasing revenue goldmine.

But tapping into a potential mother lode requires understanding the different measurement methods at play.

And particularly for larger portfolio management companies spanning different regions of the United States, understanding how they vary by state.

The United States uses the Building Owners and Managers Association (BOMA) methods of measurement. (Read more about leveraging BOMA to maximize commercial office revenue.)

Apart from one outlier. New York City plays by its own rules—landlords there follow measurement methods set by the Real Estate Board of New York (REBNY). Although upstate New York follows BOMA standards.

To optimize leasing revenue, property teams in New York City (and select adjacent Tri-state areas) must familiarize themselves with the ins and outs of the REBNY method.

NYC buildings like these are measured according to the REBNY method of building measurement.

REBNY vs. BOMA

The REBNY standard of measurement is far more aggressive than BOMA’s. Usable space is measured to the outer face of a building’s exterior wall, and the thickness of the corridor walls are included as usable footage.

REBNY also allows a loss factor to be applied to usable areas. This number is market-driven and varies on both a full floor and multi-tenant basis. With BOMA, the Gross Building Area (GBA) exceeds the rentable area. GBA can be defined as the total floor area of the building measuring from the outer surface of exterior walls. In REBNY, the opposite is true: Rentable area is almost always greater.

Landlords in New York City use different approaches to calculate the rentable area of their floors. Some examples include:

1. Applying a set full floor loss factor throughout the property.

Note that full floor loss factors can yield an excessive multi-tenant loss factor on inefficient multi-tenanted floors. In this case, most landlords cap the multi-tenant loss factor (usually between 37-38 percent).

2. Applying set floor rentable numbers per floor to simplify leasing and marketing efforts.

This may result in each floor having a different loss factor as per the relationship of the usable to rentable space.

3. Applying the “Four-Inch Method” to New Construction

The REBNY standard of measurement has remained virtually the same since 1987, except for the addition of what is informally known as the “four-inch method”. Introduced in 2003, this method favors landlords, as more usable area can be captured and leased throughout the building.

Following this method begins with measuring the floor to the outside surface of the building. Then, subtracting from this area the following, including the nominal four-inch enclosing walls:

  • Public elevator shafts and elevator machines and their enclosing walls
  • Public stairs and their enclosing walls
  • Heating, ventilating, and air-conditioning facilities (including pipes, ducts and shafts) and their enclosing walls, unless such equipment, mechanical room space, or shafts serve the floor in question
  • Fire towers and fire tower courts and their enclosing walls
  • Main telephone equipment rooms and main electric switchgear rooms

It’s standard industry practice to only apply this method to new construction. The construction drawings for new properties are used to establish and measure four inches out from the opening of shafts and other spaces specified above. Anything beyond the four-inch enclosure is included as part of the usable (office, retail, or floor common) area.

There is no binding rule that requires owners to conform to either BOMA or REBNY. However, most landlords across the commercial real estate (CRE) industry adhere to one or the other.

New York City Metro Area

The REBNY standard yields higher usable and rentable footage in New York City buildings than in any other major city in the United States. (For information about EAP and FPP compliance in New York City, read this eBook).

For more than 10 years, most Class A, and select Class B and C properties in Manhattan have primarily applied full floor loss factors at 27 percent. Multi-tenant loss factors can be as high as 38-39 percent.

Building Engines’ measurement experts expect the standard 27 percent loss factor will remain relevant for existing properties. In contrast, based on our data, new construction with high-end amenity spaces has continued to push the envelope at 28-29 percent full floor loss factor despite the pandemic’s impact. This is especially true when properties are designed by renowned architects and firms.

NYC buildings are measured according to the REBNY method of building measurement.

Outside of Manhattan

Outside of Manhattan, loss factors in New York’s other four boroughs tend to be lower, although rentable footage is still significantly higher than using BOMA standards.

As mentioned, select parts of the Tri-state area immediately surrounding New York City also use REBNY measurement standards:

  • Jersey City, NJ with loss factors as high as 19-20 percent on a single floor basis
  • Greenwich, CT with loss factors as high as 24 percent on a single floor basis
  • Long Island, NY with loss factors as high as 19- 21 percent on a single floor basis
  • Westchester County, NY with loss factors as high as 16-19% on a single floor basis

However, the rest of the Tri-state area, which is less dense than NYC, uses BOMA standards.

A Tale of Two Measurement Methods

The Big Apple is home to some of the world’s biggest commercial buildings, meaning serious leasing revenue is on the table. With many office tenants reconfiguring their spaces due to COVID-19, property teams should ensure they optimize how they measure space.

To learn more about BOMA, REBNY, and how to best leverage each standard, read the Building Engines white paper: Methods of CRE Building Measurement & National Trends.