The Way We Measure Office Buildings is Set to Change

Mark Stevens
To date the measurement of property assets has varied considerably from country to country. This has made it difficult for property users, investors, occupiers and developers to make comparisons and benchmark office space.

This has become an increasing issue, as the world has become more globalised and companies need accurate data to benchmark their property portfolios. Research by JLL has shown that the way buildings are measured can vary up to 24% in the classification and reporting of building areas.

The International Property Measurement Standards (IPMS) was created to combat these inconsistencies and agree a standard measurement guide. In November 2014 the IPMS for Office Buildings was published, the first in a suite of global measurement guides.

In May this year the Royal Institution of Chartered Surveyors (RICS) issued a professional statement requiring the change in the method of measuring buildings, stating the need to provide a “consistent and transparent basis for the measurement of office buildings”. The RICS subsequently updated their Code of Measuring Practice, 6th edition (COMP6) to incorporate the International Property Measurement Standards for Office Buildings.

Effective globally as of 18th May this year, COMP6 applies to all building classes except offices. IPMS replaces COMP6 for the measurement of office buildings only and its use is mandatory for all RICS members from 1st January 2016 – unless the client instructs otherwise.

The professional statement from the RICS also sets out the Principals of Measurement governing methodology, unit of measurement, accuracy, reporting and retaining records.

Understanding the changes

The principal area definitions of GEA (gross external area), GIA (gross internal area) and NIA (net internal area) will change, as will the description of qualifying space. We outline the key changes below with a more detailed summary in table 1. The change in definitions and what the new IPMS definitions mean are explained in full in Section 4 of the professional statement.

  • IPMS1 will equate closely to the current GEA
  • IPMS2 will equate closely to the current GIA
  • IPMS3 will equate closely to the current NIA, sometimes also referred to as net lettable area, net useable area, carpet area or other descriptions.

IPMS classes qualifying space as either:

  • Included
  • Included but measured separately
  • Limited use areas

IPMS also introduces the concept of Internal Dominant Face to establish the inside finished vertical surface to be used for determining an internal perimeter.

How does IPMS give Benefits over current measurement definitions?

Over and above everything else it provides transparency, creating a consistent language across multiple global regions of all office data. The data produced can be used for valuation, transaction and benchmarking purposes, ultimately reducing risk when facilitating international trade in property.

"This is equally important for Service Providers and Third Parties, so that data can be used with confidence for property financing, building and facility management, research and other purposes.” From the RICS professional statement.

As a user of IPMS, technical benefits include:

  • Giving guidance for the definition of Limited Use Areas, such as areas with limited height or limited daylight.
  • Providing alternatives for the calculation of the external area of basement levels.
  • Requires office area to be reported as the sum of 8 defined component areas as part of IPMS2

How will this affect value?

The professional statement deals only with measurement not with valuation. How value is apportioned to different categories of space, limited use areas and the like does not form part of the statement. This recommendation is left to the judgement and experience of the valuer, agent or developer.

What about historic benchmarking data?

The RICS is developing an online conversion tool that will enable office areas measured to IPMS to be converted back to the definitions and descriptions for areas measured to COMP6. Unfortunately this will only convert one way (back to COMP6) and requires the areas to be measured to IPMS in the first instance.

And the future?

The IPMS: Office Buildings is the first in a suite of standards to be published which harmonises international measurement standards. Currently in draft format is the IPMS: Residential Properties. This will then be followed by IPMS: Industrial Buildings and IPMS: Retail Buildings. It is expected other property classifications could also be included if there is benefit in doing so. As each standard is published, the RICS professional statement will be updated to incorporate the other asset classes.

How do I find out more?

The professional statement and accompanying IPMS and COMP6 documents are available to RICS members. Alternatively, please feel free to contact me by navigating to my profile at the bottom of this article.

Table 1


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