All commercial property owners have square footage calculations for the rentable areas in their buildings. Owners will use these numbers for leasing purposes and to project future cash flow. However, these square footages are often under-calculated (and at times, over-calculated) which limits the owner from maximizing the true value of the property.
What can a building owner do to protect their asset and potentially see it grow in terms of rentable square footage (RSF)? Many hire RDM to provide a remeasurement survey - a floor-by-floor analysis of a given property.
The benefits of a remeasurement survey can help in these three major ways:
- Confirm the accuracy of current building measurements
- Potentially lead to an increase in rentable income if more space is found
- During an acquisition, determine if a property is over or under valued.
Example: RDM performed a remeasurement survey for a property in NYC and was able to grow the building’s RSF by 100,000 square feet. If you extrapolate this out over a five year period and use a $40 per square foot rentable rate, the property will gain $20,000,000 in rentable income over this period.
How this is possible? By using either the Real Estate Board of New York (REBNY) or Building Owners and Managers Association (BOMA) accepted standard methods for measurement an increase in RSF is possible. REBNY applies a market driven loss factor on usable areas which determines the RSF for each tenant space whereas BOMA apportions building common areas to each tenant space which in turn generates the RSF and BOMA loss factor.
To the dismay of most tenants, the RSF of a building when calculated using a REBNY market loss factor may exceed the actual GBA – this loss factor will fluctuate based on market conditions. The BOMA RSF, however, is fixed and always smaller than the actual GBA of the building.
As demonstrated, utilizing these standards can increase the value of a property or in an acquisition phase, help a buyer or seller determine an accurate sale price.