Mastering a new Building Owners and Managers Association (BOMA) measurement standard doesn’t exactly make for light beach reading.
But failing to measure commercial buildings accurately can potentially cost you millions of dollars in untapped leasing revenue.
Exhibit A: Real estate investment, development, and management conglomerate the Feil Organization uncovered an additional $11.7 million in additional revenue by measuring their buildings using a more beneficial measurement standard.
Retail, industrial, and mixed-use property teams should be aware of recent changes to BOMA measurement standards that, when leveraged correctly, can lead to serious leasing revenue.
BOMA 2019 Industrial Buildings Standard
Industrial real estate vacancy rates are at an all-time low. Driven by the acute need for warehouses and fulfillment centers to support e-commerce, the sector is proving resilient to COVID-19.
But even in a red-hot industry, property owners and operators should ensure they’re getting the most value from their spaces by maximizing rentable square footage (RSF). Obtaining accurate building measurements are also critical during the due diligence process, as it’s the buyer’s responsibility to ensure the measurements presented by the seller are accurate.
Here’s the lowdown: BOMA 2019 for Industrial Buildings establishes a single method of measurement to determine rentable square footage for industrial buildings, flex buildings, and any associated structures. It can be applied to single-tenant or multi-tenant properties, and can be used to measure new, existing, and proposed buildings.
Aside from determining rentable area and leasing revenue potential, measuring your industrial buildings to adhere to this standard can also produce valuable data to determine optimal space utilization, asset valuation, and capital budgeting.
This standard includes multiple load factors (the percentage of space on a floor or building that is not usable for renting purposes) for building service, floor service area, and inter-building area. The load factors are applied to occupant areas on a pro-rata basis and provide a multi-occupant rentable area breakdown.
One of the key features of this standard is its compatibility with International Property Measurement Standards: Industrial Buildings, specifically IPMS 1. While BOMA standards are primarily designed for leasing purposes, IPMS 1 supports building planning and development efforts. Service load factors are not included in the IPMS 1 standard.
BOMA 2020 Retail Properties Standard
COVID-19 has accelerated consumer shifts towards online shopping. With e-commerce sales soaring, the future of brick-and-mortar retail is uncertain. Given this climate, having accurate BOMA measurement data to manage, market, and lease spaces effectively ensures revenue doesn’t slip through the cracks.
BOMA Retail 2020 is the first update to BOMA retail measurement methods since 2010. This standard offers property owners and asset managers the option to do a partial measurement of at least one retail unit, or an overall measurement of the entire retail property, including all retail suites and common areas.
Certain unenclosed areas deemed fundamental to the “retail experience’ (like permanent patio areas, balconies, finished rooftops etc.) are now included as part of Gross Leasable Area and Gross Leasable Exclusions.
Owners and operators also have the option to calculate parking areas, major vertical penetrations, service areas and public areas according to a retail tenant’s Gross Leasable Area.
The new retail standard is compatible with IPMS: Retail Buildings in 2021.
BOMA 2021 Mixed-Use Properties Standard
Mixed-use properties offer multiple occupancy types in one building. These offerings might include a combination of office, retail, industrial, hospitality, entertainment, civic, or institutional spaces.
This sector appears to be weathering COVID-19 relatively well. Driven in part by seismic workplace and retail shifts, tenants are flocking to more communal spaces that offer the opportunity to live, work, and play in the same area.
Mixed-use property investments are heating up as well, with these assets offering more diversified income streams and less investment risk than their single-use counterparts.
The main purpose of the BOMA 2021 Mixed-Use Properties Standard is to generate mixed-use common area allocations to be integrated with the available single-use BOMA standards. The standard classifies the different occupancy types into use components, parking components, and mixed-use common areas. The different use components are measured on a gross basis for use with this standard.
However, for rentable areas, gross leasable areas, or unit areas, use components are measured by applying the other BOMA single occupancy measurement standards.
Spoiler alert: There will be a revised BOMA 2021 Mixed-Use Properties Standard coming later in 2021.
BOMA Measurement Standards – Does Your Building Measure Up?
Unless you live and breathe area calculations, it can be challenging to master changing BOMA measurement standards.
But when leveraged correctly, new measurement standards provide an opportunity for property teams to cash in by adding additional RSF—sometimes to the tune of millions of dollars in added leasing revenue.
For a comprehensive guide to BOMA and REBNY standards and an overview of tools to help with building measurement, read the Building Engines white paper: Methods of Commercial Real Estate Building Measurement & National Trends.