Part 1: Challenges
Whether you are a small landlord with one commercial building or the asset manager of an expansive real estate portfolio, improving the lease income from each property is the most important aspect of your job. This isn’t as simple a task as it may seem. There are many challenges related to determining the correct numbers in a lease and negotiating those numbers with your tenant.
First, if you are operating with old information, you are guaranteed to be leaving money on the table. If you’re working with old rent rolls dating back to when the building was built, you stand to gain the most by updating your measurements. But even if your measurements are only 5 years old, you still have a chance to increase your Rentable Area by up to 10%! The reason for this is that BOMA updated the calculations for Rentable Area in 2017, and have included several areas that were previously excluded. Additionally, the standards for measurement have been improved in the last 10, 20, 30 years, and the square footage might have been incorrect all along.
Another challenge to consider is that the floor plans and related measurements must reflect up-to-date information on tenant occupancy and include any changes made since the original floor plan was created. If your building has undergone renovations since its initial construction—or even just last year—it's likely that some floors have adopted new layouts or been reorganized in some fashion that impacts the Rentable Area.
A final challenge that pops up from operating off of old information is getting a good tenant. A scrupulous tenant will ask about the measurements and may even hire a 3rd party to audit their Rentable Area. Additionally, most tenants need to renovate or make improvements, and having outdated or nonexistent floor plans will result in a longer time frame for their renovations. This lack of information may result in a good tenant choosing to rent elsewhere, and a less careful tenant choosing your space.
The good news is that you can easily avoid all of these challenges by having a single set of drawings developed. A good service provider will not only provide you with your BOMA drawings with each area and its use marked, but also a tabular chart for easy reference. Having the drawings and data clears up a lot of uncertainty when it comes to negotiating a lease with a new tenant, making the process quicker and smoother.
Check out the next article in the series, What is the process for having BOMA drawings done?
Check out our Master list of BOMA concepts