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The Guide to Commercial Real Estate Measurement for All Practitioners

Rent in Commercial Real Estate is calculated on a per-square-foot basis.

Therefore, real estate practitioners such as you need to use general guidelines so that all parties can remain consistent. The Building Owners and Managers Association International (BOMA) sets the standard for measuring commercial real estate space. BOMA has been the traditional way of measuring square footage for over a century. Understanding these standards will help you stand tall feeling confident because you’ve just increased a property's valuation by 10%.

My goal for this guide is to give you a simplified overview of what the standards entail.

Here we go.

Commercial Real Estate Measurement Standards

BOMA is your practical guide to commercial space measurement.

These guidelines help you consistently measure and report square footage from several types of properties. They are carefully reviewed at least every five years and revised to address the market's changing needs. Therefore, applying the standards appropriately will directly impact the value of a commercial property.

Since there are several different types of commercial properties, BOMA created various categories of standards for each. They are:

⦁ Office

⦁ Industrial

⦁ Gross Area

⦁ Multi-Unit Residential

⦁ Retail

⦁ Mixed-Use

You don't need to memorize each standard. It is only essential to know the critical differences between them.

Office Standards

The general methodology for measuring floor space in office buildings.

Office buildings are broadly defined as any space where an organization’s workers perform administrative, financial, management, or other professional services for its business. These buildings can house one or multiple tenants in urban or suburban environments. The office standard is the oldest of all the types of standards. However, it wasn’t until 2009 that BOMA included other property types, such as Industrial, Retail, Multi-Unit Residential, and Mixed-Use properties.

We also have a guide on the updated standards. You can view them here.

Industrial Standards

The conventional method for measuring floor area in industrial buildings.

Industrial buildings are broadly defined in commercial real estate as any land or buildings used for production, manufacturing, research, assembly, distribution, and storage. Zoning maps from each city designate areas for industrial property so that residencies and businesses are not disrupted. It was not until 2001 that BOMA first launched the Industrial Building standards, and in 2009 officially launched it as its branch. These standards are continuously updated and may be applied to single-tenant, multi-tenant, or multi-building structures.

Gross Area Standards

The Gross Area Standards is the tool we can use to measure nearly any building accurately.

Think of these as the fundamental standards. We can use these methodologies and other BOMA standards to align with best practices. The Gross Area Standards are also congruent with the International Property Measurement Standards. BOMA published its Gross Areas Standard in 2009 to provide a consistent method to measure all building types. There is now a 2018 revision to the Gross Area Standard to make it easier to follow.

Multi-Unit Residential Standards

BOMA standards are not only measured in office buildings.

Multi-unit residential buildings, condominiums, cooperatives, and other communities containing four or more living units can also be measured. These standards are intended to measure individual units and the aggregate area of a building.

Retail Standards

The conventional method to measuring gross leasable area in retail buildings.

Retail spaces include properties used to market and sell consumer goods and services. These types of properties have experienced a significant shift lately due to e-commerce. Retail can be considered single storefronts, strip/shopping centers, malls, department stores, supermarkets, restaurants, and big-box stores. The retail standards were published in 2010 and revised in 2020 to address ambiguities and inconsistencies.

Mixed-Use Standards

Area measurement standards for combined property types.

Mixed-use commercial property is a building or land development that includes two or more property types: office, retail, industrial, single, or multi-tenant residential, entertainment, hospitality, and public and private institutional buildings. An excellent example of this would be residential and commercial space. These would be apartment units on the top floor of a building with office space below. Most mixed-use properties will have the residential portion take up square footage than commercial. BOMA published the first standard for mixed-use properties in 2012. Many real estate practitioners may believe mixed-use property measurement could be complex. Still, BOMA has determined a simplified methodology for allocating the space.

Conclusion to Real Estate Measurement

My goal with this guide was to give you a simplified overview of the BOMA standards.

Each of these standards can get a lot more in-depth. But knowing them will unlock many benefits, such as:

⦁ Helping you add value for your clients.

⦁ Helping you improve your ability to advise.

⦁ Increasing a property's income and the value of its assets.

⦁ Helping protect clients from tenant disputes.

Ultimately, calculating the square footage of commercial space could take much work. Therefore, you may need to consider a BOMA expert.

Thanks for reading! 🙂

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