Preporučena metoda za merenje unajmljivog prostora
Ova preporuka definiše tražene uslove i koncept merenja prostora za iznajmljivanje; svrstava razna područja u različite kategorije najma; objašnjava principe definicije prostora i na osnovu toga predlaže metodu za analizu i kalkulaciju prostora za iznajmljivanje. Takođe uvodi koncept odnosa vrednosti najma. Ova kalkulacijska metoda se preporučuje u slučaju zgrada koje imaju više zakupaca , iako se može primeniti i kod nekretnina koje imaju jednog zakupca.
Terminology
It is important to choose, introduce and accurately define the relevant technical terms to avoid
misunderstandings, and to ensure that each of them is also easily understandable and clear to
tenants. Furthermore, the fewer technical terms there are the better, and they should follow each
other in a logical order, and be easy to remember even by the layman. It is essential to use
uniformly accepted technical terms understood by everybody and defined objectively.
**Ancillary area**
All areas used by the tenant and required for efficient office work.
Note: These areas may be exclusive and/or common areas, such as meeting room, tea kitchen, sanitary
block, server room, document storage room, general storage room, copy room, broom closet, cloakroom,
smoking room etc.
**Building common area**
The total of all areas in the building capable of use directly or indirectly by all tenants.
Note: in a leasable area analysis it is to be calculated according to the principle of maximising
the exclusive area on any all-inclusive floor (see the ‘Leasable Area Analysis’ section for a
detailed explanation). In a ‘one tenant, one building’ scenario this area will also be considered
exclusively used.
Explanation: areas indirectly used by tenants include for example the common cleaning supply storage
room, garbage room etc.
General comment:
the following four technical terms should only be used if the area of the relevant
floor or floor unit usable exclusively by a single tenant is leased by more than one tenant and thus
the concept of floor common area also needs to be used.
**Circulation area**
Area used by the tenant for circulation (or perhaps for waiting) due to the architectural layout of
the premises.
Note: these areas may be exclusive and/or common areas such as corridor, vestibule, lobby, entrance
hall etc.
**Exclusive area**
All areas separable by or for and exclusively used by the tenant.
Note: in a leasable area analysis it is to be calculated according to the principle of maximising
the exclusive area on any all-inclusive floor (see the ‘Leasable Area Analysis’ section for a
detailed explanation) for the entire building. In a ‘one tenant, one building’ scenario the entire
area will be considered exclusive area.
**Floor common area**
All areas of the floor that are necessarily capable of use only by the tenants of the relevant floor
directly or indirectly.
**Floor exclusive area**
All areas with separate access by a particular tenant of the relevant floor, who can close or use it
separately.
Note: the floor area exclusively used by a tenant is marked with the tenant's name (e.g. floor
exclusive area of tenant X).
**Floor leasable area portion**
The floor area exclusively used by one tenant of the relevant floor and the pro-rata portion of the
floor common area.
Calculation: floor exclusive area of tenant + pro-rata portion of the floor common area.
**Gross floor area**
The largest covered horizontal surface area of any all-inclusive floor, enclosed by the finished
external wall surfaces; i.e. the total area encircled by the external perimeter of the building
(excluding internal courtyards and air shafts).
Note: in leasing practice it can be used in one tenant, one building scenarios, subject to the
mutual agreement of landlord and tenant.
**Leasable area**
The exclusive area of a tenant and the pro-rata portion of building and floor common areas, i.e. the
area for which the tenant pays rent under the terms of the lease.
Calculation:
* if the relevant floor usable exclusively by a single tenant is in fact leased by a single tenant,
then it is the exclusive area + the pro-rata portion of the building common area;
* if the relevant floor usable exclusively by a single tenant is leased by more than one tenant and
no floor common area is needed, then it is the tenant’s exclusive area + the pro-rata portion of the
building common area;
* if the relevant floor usable exclusively by a single tenant is leased by more than one tenant and
afloor common area is needed, then it is the tenant’s floor leasable area portion + the pro-rata
portion of the building common area.
**Multi-tenant floor area**
Area capable of use solely by the tenants of the relevant floor or floor unit, which does not
include the building common area of the relevant all-inclusive floor capable of use by all tenants.
Note: hereafter the term floor shall mean either floor or floor unit.
**Net area**
The largest horizontal surface area of any room above floor (and skirting board) level, enclosed by
the internal surfaces of the finished load bearing or fixed walls of the room, irrespective of
ceiling height.
Note:
in the absence of an on-site measurement, this is the area enclosed by the unfinished wall surfaces
as shown in the architect's floor plan;
hereafter area of rooms shall always mean net area.
**Other area**
Any other areas used by the tenant.
Note:
* these areas may be exclusive and/or common areas such as terrace, balcony etc.;
* the area of open or partially open spaces (terrace, balcony etc.) shall be their hard surfaced
area (net area is not applicable here).
**Working area**
Tenant's exclusive area, equipped with office furniture.
Note: if the office has an open-plan layout, the circulation areas between tables also form part of
the working area.
**Building common area multiplier**
The quotient of the total leasable area and the exclusive area of the entire building.
Calculation: the total leasable area of the entire building / the total of the exclusive areas of
the entire building, or 1 + building common area ratio / 100.
General comment:
The following two technical terms should only be used if the area of the relevant
floor or floor unit usable exclusively by a single tenant is leased by more than one tenant and thus
the concept of floor common area also needs to be used.
**Building common area ratio**
The ratio of common and exclusive areas of the entire building, expressed as a percentage.
Calculation: (building common area / total of the exclusive areas of the entire building) × 100.
Note: the smallest building common area ratio, which is preferable from the point of view of
leasing, can be calculated from the largest exclusive area of the entire building, which equals the
sum of all leased premises obtained by applying the principle of maximising the exclusive area on
any all-inclusive floor (see the ‘Leasable Area Analysis’ section for a detailed explanation).
**Floor common area multiplier**
The quotient of the area suitable for exclusive use by a single tenant on the relevant floor and the
floor exclusive area of the relevant floor.
Calculation: area of the relevant floor suitable for exclusive use by a single tenant / floor
exclusive area, or 1 + floor common area ratio / 100.
**Floor common area ratio**
The ratio of the floor common area and the floor exclusive area of the relevant floor, expressed as
a percentage.
Calculation: (floor common area / floor exclusive area) × 100.
**Lease value ratio**
The value reflecting the function, location and utility of a room (space) expressed as a percentage,
determined by the landlord.
Explanation: while the lease value ratio of a regular office area is of course 100%, in the case of
a general storage room it could be, for example 50%. The lease value ratio is the ‘common
denominator’ allowing rents to be calculated for all leasable areas using the same base rent per m2
and managing them consistently in the leasable area analysis and calculation.
**Building common area multiplier**
The quotient of the total leasable area and the exclusive area of the entire building.
Calculation: the total leasable area of the entire building / the total of the exclusive areas of
the entire building, or 1 + building common area ratio / 100.
General comment:
The following two technical terms should only be used if the area of the relevant
floor or floor unit usable exclusively by a single tenant is leased by more than one tenant and thus
the concept of floor common area also needs to be used.
**Building common area ratio**
The ratio of common and exclusive areas of the entire building, expressed as a percentage.
Calculation: (building common area / total of the exclusive areas of the entire building) × 100.
Note: the smallest building common area ratio, which is preferable from the point of view of
leasing, can be calculated from the largest exclusive area of the entire building, which equals the
sum of all leased premises obtained by applying the principle of maximising the exclusive area on
any all-inclusive floor (see the ‘Leasable Area Analysis’ section for a detailed explanation).
**Floor common area multiplier**
The quotient of the area suitable for exclusive use by a single tenant on the relevant floor and the
floor exclusive area of the relevant floor.
Calculation: area of the relevant floor suitable for exclusive use by a single tenant / floor
exclusive area, or 1 + floor common area ratio / 100.
**Floor common area ratio**
The ratio of the floor common area and the floor exclusive area of the relevant floor, expressed as
a percentage.
Calculation: (floor common area / floor exclusive area) × 100.
**Lease value ratio**
The value reflecting the function, location and utility of a room (space) expressed as a percentage,
determined by the landlord.
Explanation: while the lease value ratio of a regular office area is of course 100%, in the case of
a general storage room it could be, for example 50%. The lease value ratio is the ‘common
denominator’ allowing rents to be calculated for all leasable areas using the same base rent per m2
and managing them consistently in the leasable area analysis and calculation.
**Area Categories**
The areas of an office building are different mainly in terms of functionality. Areas can be
leasable or non-leasable. Leasable areas can be identified by their function, and they can be
exclusive or common. The categories below are divided into leasable and non-leasable areas, showing
the functions typically present in an office building.
Note: further categories can be added if required (e.g. if the building incorporates a retail unit
with street access etc).
**Exclusive areas**
* working area (principal function/core activity)
* cellular office
* open-plan office
**Exclusively used and/or common areas**
* ancillary areas:
* document/general storage room – sanitary block
* meeting/conference room – training room
* reception/waiting room – smoking room
* tea kitchen/dining room – kitchen/cafeteria
* copy room – break room/medical room
* cloakroom/clothes closet – built-in cupboard
* server room – broom closet
* building management room – security room
* cleaning supply storage room – garbage room etc.
* circulation areas:
* vestibule/corridor/entrance hall – internal staircase
* lobby – staircase
* lift lobby – underground garage lobby
* undeveloped area under the stairs leading up from the lowest floor, with a ceiling height of over
1.9 m
* external walkway etc.
* other areas:
* terrace/roof terrace
* balcony/loggia
* area partitioned off at the tenant's request/vertical shafts/risers
* any other tenant fit-out (e.g.. electrical cabinet, freight lift, generator room etc.)
* areas beneath partition walls (usually gypsum board or mobile walls)
* areas beneath internal load-bearing columns (if the area measured beneath the column at floor
level is less than 0.5 m2)
* areas under radiators or heating and cooling units
* wall recesses starting at floor level etc.
**Parking areas**
The parking is also a leasable area, but rent is determined per parking space rather than per m2.
Note: the square metre equivalent of a parking space can be calculated from the base rent per m2:
for example, assuming a base rent of EUR 12 per m2, the m2 equivalent of a parking space in an
underground garage renting at EUR 80 per month will be 6.66. In the case of average base rents the
equivalent parking area is 6-8 m2.
**Areas beneath doors and windows**
* area at floor level beneath doors and windows installed in load-bearing, perimeter and fixed walls
**Areas under the structure**
* area beneath external load-bearing/perimeter walls
* area beneath external load-bearing columns
* area beneath internal load-bearing walls
* area beneath internal load-bearing columns
note: if the area measured beneath the column (at floor level) is greater than 0.5 m2
* area beneath internal non-load-bearing walls fixed because of functional considerations
(hereafter: fixed walls)
note: e.g. area beneath the walls of sanitary blocks and walls of mechanical shafts etc.
* undeveloped area under the stairs leading up from the lowest floor, with a ceiling height below
1.9 m
**Attached building components**
* external stairs, ramp or man-made incline
* light well, undeveloped attic space, area under canopy etc.
Note:
* the technical areas required for the operation of the building are usually not
considered leasable areas;
* fire stairs and escape routes are not considered leasable areas.
**Electrical / IT areas**
Note: IT (Information Technology) means low-voltage telephone and computer cabling (data cabling).
* electrical/IT rooms:
* electrical switch room – central switchboard
* central generator room – central UPS room etc.
* area occupied by electricity/IT ducts/shafts:
* closed or open shafts – electrical cabinet etc.
* circulation areas exclusive to electrical/IT rooms:
* vestibule/entryway/entrance hall – corridor/circulation area
* stairway – lift lobby
* internal staircase – external walkway etc.
**Mechanical areas**
* mechanical rooms:
* boiler room – HVAC room
* gas meter room – lift machinery room etc.
* area occupied by plant and machinery:
* lift – freight lift
* other vertical transportation equipment etc.
* area occupied by mechanical shafts:
* lift shaft – chimney
* closed or open shaft – hydrant cabinet etc.
* circulation areas exclusive to mechanical rooms:
* vestibule/entryway/entrance hall – corridor/circulation area
* stairway – lift lobby
* internal staircase – external walkway etc.
**GIF – Tricks in Calculating Leasable Office Area**
Before embarking on this little essay, I must point out that I am working from my experience
gathered during almost 10 years of negotiations with tenants, directly or through agents;
negotiations that were often arduous and which, if we were lucky, led to the signing of a lease
contract. I hope therefore that these subjective comments, critique and recommendations may serve as
a starting point for discussion, potentially within this very forum.
As it is well known, the two key components of office lease contracts are the rent and the size of
the leasable area. The product of these two figures is generally equal to the developer’s net
income.
Given that multiplication is a basic mathematical operation and that it is the product that
interests the developer, he will attempt to increase leasable area, while keeping the rent at a
level that still attracts tenants.
Knowing the total cost of a project, developers seek to earn a target yield, which is also dependent
on the aforementioned product of multiplication. Disregarding for the sake of simplicity the
additional important components of any carefully worded lease contract, success in finding tenants
lies in a relatively low rent applied to the largest possible leasable area.
Tenants tend to focus on rental rates per square metre, which are easily compared to others on the
market, and often pay little attention to the size and calculation method of leasable area.
Unfortunately, there is no generally accepted and uniformly used recommendation or guideline (let
alone a standard) for measuring leasable areas in office buildings in Hungary.
There is chaos in this field today!
A typical example is the widely different interpretation of the commonly used term gross area.
Whenever this term is used at a meeting, I always ask what the other party means by it. The most
frequent answers are:
1. It includes the ancillary areas (washroom, tea kitchen) as well,
2. It means a usable area increased by the common area multiplier,
3. It means the total area within the outside perimeter walls of the building.
So which is the correct answer?
Unfortunately, in the absence of a generally accepted and uniformly interpreted terminology, there
is no unambiguous choice of answer.
It is also unfortunate that a consensus is lacking not only amongst clients, but also within the
real estate profession.
In the following, I include a brief summary of the recommendations of the German GIF (Gesellschaft
für Immobilienwirtschaftliche Forschung) concerning terminology and area calculation, with special
attention to the categorisation of the various rooms within an office building as leasable or
non-leasable. It should be noted here that the GIF was the outcome of a joint effort between the DIN
277 German National Standard and the Deutscher Verband Chartered Surveyors. The table on the next
page is a simplified summary of the relevant stipulations of the GIF.
As you can see in the table, the GIF calculates the ‘usable area’ by including the ancillary areas
(e.g. sanitary block, tea kitchen, etc.). Experience suggests that knowledgeable tenants are only
interested in the working area they can furnish (often referred to as net-net area in our internal
slang), and not in the ancillary areas.
**The GIF categorisation of areas**
GIF = Gesellschaft für Immobilienwirtschaftliche Forschung
This is natural, as the size of this area will determine the possible number of workplaces (the
ratio between open-plan and cellular offices, and the size of ancillary and circulation areas are
also key to determining leasable area). Working areas usually cannot be quantified in building
brochures. Depending on the features and layout of the building, the ratio of working area to the
total leasable area of the building can be surprisingly low, especially in building with a cellular
layout.
The GIF recommendation includes in the leasable area all the areas under movable partitioning walls,
the ancillary areas, the lobby and the circulation areas, and also the lift lobbies. However, it
classifies as non-leasable the areas under load-bearing structures or other non-movable walls, and
also the mechanical rooms, mechanical vertical shafts, lift shafts and staircases.
The area of individual rooms is always calculated between the internal surfaces of the fixed walls
(net area), even if there are cable ducts or mechanical fittings (cooler/heater) or perhaps a wall
with machinery fixed to it.
I leave it up to the reader to decide whether the above main principles of calculating leasable area
and the terminology of the GIF are adequate generally and specifically for the local environment in
Hungary.
There is a famous case, well known in professional circles, which proves the importance of the above
problems, where a tenant withdrew from a signed lease contract due to a mutual misunderstanding over
the leasable area measurement.
Given the current market conditions for commercial office space, there is an increased need for a
leasable area calculation that is correct and also transparent to tenants.
The above confirms the need for a unified terminology and area measurement method that is adapted to
the Hungarian market and accepted by the key players in this market. In preparation for that
ultimate goal, our forthcoming issues will include further descriptions and finally a summary of
national recommendations.
**BOMA – More Tricks in Calculating Leasable Office Area**
Before delving into a discussion of the mysteries of BOMA, I wish to share with you, dear reader, an
interesting and surprising experience that I had in connection with my article on the subject of
measuring office space in the previous issue.
I was representing the landlord of a Buda office building at a series of public procurement
negotiations over the past few weeks. At one of the first sessions, the leader of the tenant’s
representatives asked whether the area we were offering for lease was to be understood as net-net? I
was so startled that I answered with a question: Where did you learn this unusual term?
He cited a recently published article, which stated that all potential tenants should look to the
net-net area as an especially important piece of information. When he added when and where this
article was published, I was able to reveal myself as the author, and after the initial surprise the
atmosphere of the meeting became much more pleasant.
And now let us see what that American acronym, BOMA stands for. The legal predecessor of the
Building Owners and Managers Association International (BOMA International or BOMA) was formed in
1907 with a mission to represent the interests of owners and managers of commercial properties. BOMA
consists mainly of US and Canadian local associations. Besides its increasing dominance, this
international association's primary task is to collect, analyse and arrange information on
commercial properties, and to formulate recommendations and standards on this basis. On a not so
marginal note: the key local associations of BOMA already possessed and/or managed more than 550
million m2 of commercial office space – by 1996.
The first tall buildings, which already carried, in embryonic form, the design principles of the
later skyscrapers of America, were office buildings built at the end of the 1800’s. The fast
economic growth of the time eliminated the obstacles to the construction and use of tall buildings.
The most important achievements were the development of the technology of a safe and reliable lift,
the ability to provide buildings with a dependable energy supply and, last but not least,
improvements in the production of structural steel. Real skyscrapers have been built since the late
1920’s. The 102-storey and 381-metre high Empire State Building in New York dating from 1931, the
100-storey and 344-metre high John Hancock Center in Chicago from 1970, the 412-metre high and
110-storey, tragically destroyed World Trade Center from 1972 and the 109-storey and 443-metre high
Sears Tower in Chicago from 1974, proud bearer of the title of ‘tallest’ for many years, are perhaps
the most famous. These prominent skyscrapers are (or were) predominantly office buildings.
As early as in 1915, soon after the first ‘real’ office buildings were completed, the need arose for
developing a uniform office area calculation method. BOMA then headed the effort of developing the
first Standard Method of Floor Measurement for Office Buildings, which was elevated, with the
approval of the American National Standards Institute, to the industry standard in 1955, after
numerous changes reflecting the evolution of office buildings and the emergence of new needs and
opportunities. Today it bears the title Standard Method for
Measuring Floor Area in Office Buildings and mainly helps property developers/owners, managers,
architects, interior designers, engineers, appraisers and agents to coordinate their work.
Notably, in accordance with the American usage of the term, this standard is essentially a ‘strong
recommendation’ for the unified definition of the areas of old and new office buildings.
The main aim of the standard is to give a clear and unambiguous terminology for office building
areas that could otherwise be understood and categorised differently, defining, among other
concepts, usable area, leasable area and building common area. The standard also includes diagrams,
to demonstrate and explain the text.
Below, I am describing some of the interesting points of the aforementioned BOMA standard, limiting
the discussion to those that are unusual, if not unknown, in this country.
The first feature to mention is the ‘magnanimous’ interpretation of the different calculations of
area using dissimilar data and methods. In general, no one would be surprised if the area figures
shown in construction drawings are not exactly equal to those measured on-site. Often, the
landlord's calculations based on on-site measurement produce results that are different from the
calculations carried out by the tenant on the same basis. BOMA allows for a maximum deviation of
±2%. Any deviations beyond that must be submitted to the judgement of an independent expert, whose
own measurement results will determine the dispute.
Another interesting, and to us unusual, BOMA concept is dominant portion. In Hungarian practice the
distance used to calculate the net areas of rooms bordered by outer building walls is usually
measured to the interior surfaces of the walls or the walls below the windows (measured above
skirting board level), even if these walls are much lower than usual. BOMA however offers the
definition of dominant portion, whereby the distance to the inner side of the external perimeter
wall can be measured either to the wall below the window or up to the window pane, giving a longer
distance. BOMA requires measuring the distance up to the dividing unit (wall or window pane) whose
surface dominates, i.e. exceeds 50% of, the vertical floor-to-ceiling height!
Similarly to the GIF (Gesellschaft für Immobilienwirtschaftliche Forschung) recommendation described
in our previous issue, gross area for BOMA means the total area encircled by the outer surface of
the permanent walls of the building, excluding any external walkways, balconies, terraces etc. that
are beyond the outer wall surface. The recommendation points out that it is not customary to
calculate the gross area as leasable area, unless a single tenant leases an entire building. This
gross area is often referred to as built or constructed area. In most cases, this is used as the
basis for calculating the construction cost of a building.
The background logic of the BOMA definition of leasable area is interesting. According to BOMA,
leasable area is calculated by deducting the so-called major vertical penetrations from the gross
area of a building. By definition, these are penetrations that are essentially unchangeable
throughout the life of the building, and include the area of staircases, lift shafts, vertical
mechanical ducts and walls covering these etc., but not load-bearing columns, vertical shafts and
cable ducts accessible from the floors.
By the BOMA definition, the office area is generally equivalent to the actually usable and
furnishable, exclusively used net working area (net-net area!). If the exclusively used area
includes ancillary rooms (e.g. sanitary block) as well, then these areas are also included in the
figure. The term storage area also means a net area of exclusive use. The building common area and
the floor common area are two different concepts. Their sum is equal to the total commonly used net
area.
Usable area means for BOMA the sum total of the net office and storage areas plus the net building
common area proportionate to the given floor.
The table on the next page is a simplified, schematic representation of the components of leasable
area on an office building floor, as described by BOMA
**The BOMA categorisation of floor areas**
BOMA = Building Owners and Managers Association International
As seen above, the terminology and office building leasable area definitions of the standard
recommendations developed and published by BOMA International, essentially on the basis of North
American experience, are rather unusual for us. However, this does not mean that nearly 100 years of
BOMA’s experience should not deserve special attention in the effort to develop a unified area
calculation method here in Hungary.
**RICS – Yet More Tricks in Calculating Leasable Office Area**
After the summaries of the German (GIF) and the American (BOMA) area categorisation recommendations
discussed in our previous issues, let us now look at the relevant recommendations of that
respectable and long established professional organisation, the British Royal Institution of
Chartered Surveyors (RICS).
A few words about the RICS itself should serve as introduction. The Royal Institution of Chartered
Surveyors was established as a professional organisation in 1868. It has over 80,000 members
worldwide and it is currently one of the largest professional bodies in the real estate business.
British citizenship is not a precondition for membership, and foreign members now number over
10,000. Admission to the RICS requires passing both written and verbal examinations, as well as
practical experience in the profession. Its members are property experts with global knowledge and
familiarity with the whole lifecycle of properties, able to contribute professional advice to
furthering the efficient operation of the property markets of their respective countries.
In addition to offering training courses and continuing education, the RICS regulates and monitors
the professional and ethical aspects of its members’ work. It also develops recommendations covering
various areas of the real estate profession. One example of this is the RICS Code of Measuring
Practice. The main purpose of these area calculation recommendations is to provide clear and
consistent methods for calculating the area and/or volume of land, plots and buildings with diverse
functions.
In the following, we will limit this discussion to the recommendations of the Code of Measuring
Practice (5th edition) focusing on those parts that expressly concern for office buildings.
These recommendations are not mandatory, although in practice most real estate experts, property
managers, brokers and architects follow the rules defined in the Code. Area calculation following
the RICS recommendations may serve as the basis for the sale and lease of properties, as well as
valuations and the resolution of complex taxation issues.
It should be noted here that since 1993 it has been a crime in the United Kingdom to sell or lease
property citing false area information. The RICS specifically states that information can be
considered misleading and therefore constitutes a criminal offence even if it is clear to property
professionals but is overly technical and too complicated to be understood by the average buyer or
seller.
The recommendations also discuss the issue of measurement accuracy. They are not specific, stating
only that professionals should aim for the greatest possible accuracy within the limitations of
their measurement devices and expertise. The measurement method and the expected accuracy will of
course differ when measuring several hectares of land or a single office space. The recommendations
lay down general guidelines but do not specify any variances to be observed.
Although it is self-evident for us, the RICS recommendations draw special attention to the need to
use the metric system, replacing the decimal point with a comma and separating thousands with a
space rather than a comma. The latter is especially worth mentioning here, because although the
Hungarian spelling rules are unambiguous on this matter, a lot of documents nowadays deviate from
these rules and apply a British or American spelling, or even a mixture of the two.
Expressly to make area measurement and calculation methods transparent to the layman, the RICS
recommendations describe and explain in detail only three basic, interrelated terms.
These are:
* Gross External Area (GEA)
* Gross Internal Area (GIA)
* Net Internal Area (NIA).
The following is a description of the main features of the above key concepts as they relate to the
office market.
Gross external area stands for the area enclosed by the outer perimeter of the external walls of
each floor of the building. It excludes open balconies, canopies and roof terraces. The
recommendations suggest using the gross external area figure for urban design, property tax
calculation and the valuation of existing, mainly residential properties for building insurance
purposes.
Gross internal area means the area enclosed by the internal perimeter of the external walls of the
building of each floor. It excludes the areas beneath the external perimeter structure (walls,
columns) and, by definition, any open balconies, canopies and roof terraces etc. In contrast with
the practice of many other countries, the RICS recommendations consider this area figure to be the
best suited for estimating the costs of planned projects, for valuing and selling existing buildings
currently used for non-office purposes and for calculating the operating costs of such buildings.
Net internal area stands for the area within the building that is equal to the sum of the areas of
rooms of different functions enclosed by load-bearing and/or fixed (not removable) walls. This area,
which the RICS also calls usable area, excludes common entrance halls, staircases, corridors,
mechanical rooms, meter cabinets, lifts and any building areas with a ceiling height below 1.5 m
high and areas between walls/structures narrower than 0.25 m. Unusually, the recommendations exclude
from the usable area all sanitary blocks and broom closets, regardless of where they are within the
building. In addition to the areas beneath load-bearing walls, the areas beneath the internal
load-bearing columns of the building are also excluded. The RICS recommendations use the concept of
building common area, but consistently exclude these from the usable area.
The usable area is the recommended basis of calculation for the purposes of selling, leasing,
valuing and operating an office.
The areas defined by the RICS and their categorisation are shown, in a simplified form, in the table
on the next page.
As seen in the table, the RICS recommendations are essentially just a guideline for defining and
calculating the various area types. However, they do not specify the components of leasable area and
do not describe the method of leasable area calculation.
**The RICS categorisation of areas**
RICS = Royal Institution of Chartered Surveyors
Due to the general nature of the recommendations, British property experts may calculate leasable
areas based on their experience and the conventions of the local market, concentrating at all times
on the accuracy of the results of the calculation method chosen and on ensuring that the results are
clear and transparent even for the layman.
Mara Todorovic
+381 64 983 9266
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