Alternative Methods of Measurement Overview
In most instances, the law does not specify or require that a real estate transaction employ one measuring standard or another. When it comes to area determination, adherence to industry standards and local business practices is usually voluntary. What ultimately matters is that engaged parties can agree upon a methodology for the purpose of completing a given transaction. This guide details several documented industry and local alternatives for measuring different building types.
FAIR Method (Floor Area Information for Realty)
Extreme Measures Inc. developed the FAIR Measuring Method because current available measuring standards do not always address the diversity of architecture and leasing scenarios found in today's buildings. The FAIR Method is used to determine rentable areas of commercial real estate on a building-wide or complex-wide basis. Conceptually, the FAIR Method is similar to BOMA 1996 but adds two additional gross-up factors, called Private Common Area and Complex Common Area. Private Common Area is space within a building or complex that is proportionately shared by two or more tenants. Complex Common Area is space within a building or complex that is proportionately shared by all of the tenants in the complex. The FAIR Method also simplifies how individual areas are calculated by emphasizing a consistent center-wall measurement technique between tenants and common areas.
Known as the "E1836-01 Standard Classification for Building Floor Area Measurements for Facility Management", the IFMA standard was originally introduced in 1996. The IFMA standard was developed to address issues relating to strategic facility planning, occupant requirements, space planning and internal chargeback systems. The IFMA standard was not designed for determining lease areas and specifically recommends BOMA 1996 for this purpose.
Rentable area is determined by calculating a tenant's usable area and then by applying a fixed gross-up (i.e. 12%) to recover common expenses. Fixed gross-ups can be applied to an entire complex, building, floor or tenant. Though this technique may result in desirable or marketable rentable area figures, fixed gross-ups are artificial and do not necessarily recover the actual rentable area of a given premises.
The tenant lease specifies that the tenant gross-up percentage will not exceed a specified amount (usually based on local market conditions). If it is determined that a tenant's actual gross-up exceeds the capped gross-up, then the capped gross-up will be applied. If it is determined that the actual gross-up is less than the capped gross-up, then the actual gross-up is used.
Gross Area Definitions
Gross Area may be referred to as Gross Building Area, Gross Rentable Area, Gross Floor Area or Construction Area. Generally, such calculations are all-inclusive and do not exclude any building elements (such as parking areas or vertical penetrations). Depending on the specifics of a given lease, Gross Area may be calculated to the interior or exterior finished surface of outside walls.
Custom Lease Definitions
Building owners and managers may develop unique or novel methods for determining tenant rentable area. Such methodologies are usually outlined in the lease document and may or may not resemble actual industry standards. Ultimately, as long as the lessor and lessee are able to agree on the stated method, there is nothing wrong with using a custom lease definition.
City of Toronto Zoning Non-Residential Gross Floor Area (NRGFA)
The definition of NRGFA as per the City of Toronto Zoning By-Law No. 438-86 is as follows:
"Non-residential gross floor area" means the aggregate of the areas of each floor and the spaces occupied by walls and stairs, above or below grade, of a non-residential building or the non-residential portion of a mixed-use building, measured between the exterior faces of the exterior walls of the building or structure at the level of each floor, exclusive of the following areas:
(i) a room or enclosed area, including its enclosing walls, within the building or structure above or below grade that is used exclusively for the accommodation of heating, cooling, ventilating, electrical, mechanical (other than escalators) or telecommunications equipment that service the building;
(ii) loading facilities above or below grade required by this by-law;
(iii) a part of the building or structure below grade that is used for the parking of motor vehicles or bicycles, storage or other accessory use;
(iv) a part of the building or structure above grade that is used for the required parking or storage of bicycles; and
(v) a part of the building or structure below grade that was erected and used for one or more non-residential use permitted by this by-law on the lot on January 31, 1976.
Public Works and Government Services Canada (PWGSC)
The measurement instructions (sometimes referred to as Schedule "B" of the Generic Lease Documentation Package) for property leased to the Canadian Government are as follows:
- If an outer building wall consists of at least 50% glass (based on a minimum ceiling height of 2,600 mm) the measurement shall be taken from the inside surface of the glass.
- If the glass surfaces are sloping or of any other irregular design the measurement shall be taken from the glass surface nearest the inside finish of the outer building wall.
- Accessory Areas are the common use areas of the Building, along with their enclosing walls (except where such walls abut Building Service Areas), including toilets, janitor closets, slopsinks, electrical closets, telecommunication closets, public corridors and elevator lobbies.
- Building Service Areas are those areas, with their enclosing walls, necessary to the operation of the Building, including main entrance lobby, main floor elevator lobby, public stairs, fire towers, elevator shafts, flues, stacks, pipe shafts, other vertical ducts, air conditioning room (including fan rooms on floors), meter room, garbage room, janitorial storage room (serving the whole Building), dumbwaiter, and loading docks (serving the whole Building).
- The rentable area of a whole floor shall be the area within the outside walls computed by measuring to the inside finish (or surface of the glass, as appropriate) of permanent outer building walls without deduction for columns or projections necessary to the Building or for enclosures around the periphery of the Building used for the purposes of cooling, heating and ventilating, excluding from such measurement Building Service Areas, but including Accessory Areas within and serving only that floor and, if applicable, a proportionate share of Accessory Areas serving more than one floor.
- The rentable area of a portion of a floor shall be the area within the outside walls computed by measuring to the inside finish (or surface of the glass, as appropriate) of permanent outer building walls, to the inside surface of the corridor walls and to the centre of the partitions that separate the portion of the floor from adjoining portions of the floor, without deduction for columns or projections necessary to the Building or for enclosures around the periphery of the Building used for the purposes of cooling, heating and ventilating, excluding from such measurement Building Service Areas, but including a proportionate share of Accessory Areas servicing only that floor and, if applicable, a proportionate share of Accessory Areas serving more than one floor.
- The usable area of a floor or of a portion of a floor shall be the area within the outside walls computed by measuring in the manner described for computing the rentable area, excluding from such measurement Building Service Areas and Accessory Areas (together with the enclosing walls of such Accessory Areas which separate them from usable area on the balance of the floor) and also excluding the area occupied by columns and projections necessary to the Building or by enclosures around the periphery of the Building used for the purposes of cooling, heating and ventilating.
There is no single widely adopted method of determining the square footage of residential dwellings but in 1996 the American National Standards Institute (ANSI) did publish the relatively unknown "American National Standard for Single-Family Residential Buildings - Square Footage - Method for Calculating", also referred to as ANSI Z765-1996.
According to the standard, area calculations should be taken to the exterior face of the building at each floor level and, in the case of attached units, to the center of demising walls. The standard makes a clear distinction between finished areas, unfinished areas, below grade finished areas, storage areas, porches, garages, patios, and decks and requires separate reporting of these areas.