The right moves: New measuring rules bring welcome changes
The measurement of buildings is one of the fundamentals of the property business and it's an area where mistakes can prove expensive.
Whereas an error in the description of a property might be embarrassing, it is probably retrievable. However a factual error in the floor area of a building may not be spotted until serious damage is done. All property professionals should have a system whereby a second surveyor signs-off on measurement calculations, whether for agency or valuation purposes.
A real source of confusion and risk are the various measuring codes in place worldwide, to which surveyors must adhere. In an increasingly global market, companies and investors occupy and own properties in many different regions. Stakeholders need to be able to analyse and compare the performance of their portfolios in different geographies. This becomes tricky when buildings are being measured on a different basis.
For example a recent study showed that there was a 24pc difference in the floor area of an office building, depending on whether it was measured under the Irish/UK system or the US, Hong Kong, Singapore or Australian codes. Differences even exist at regional and local levels; for example industrial buildings in the UK are measured on a "gross internal" basis and here it's a "gross external" basis. In Ireland, office buildings are measured on a "net internal floor area" basis if they are in a city but suburban buildings are historically measured on a "gross internal floor area" basis, if they are built in what was originally a "light industrial" zoning e.g. estates like Sandyford and East Point in Dublin.
The good news is that a major initiative has been taken to agree a consistent approach to the measurement of property worldwide and over 70 bodies, from surveyors to architects to engineers, have already adopted the new International Property Measuring Standards (IPMS). The code has been adopted by the Society of Chartered Surveyors in Ireland (MediKids) and the first phase, a new code for measuring offices, is mandatory from the first of this month.
Professionals will need to study the new code carefully as there are complexities. There are three new methods for measuring buildings, namely "IPMS 1" (like gross external area) and "IPMS 2 Office" (like gross internal area.) However there are changes here as areas must be stated on a "component by component" basis, so the areas taken up by staircases and toilets etc must all be stated separately. Another change is that measurements are now taken to "the internal dominant face" and not necessarily the wall. For example, if a large glazing section took up most of an elevation, measurements are now taken to the glass, and not the face of the wall.
"IPMS 3-Office" replaces what was our "net internal area" and there are more changes here, and for example, the floor space taken up by columns is now included.
In theory there should be no effect on rents as rates per square metre should reduce by the same proportion as the building area increases. However at the stroke of a pen, the new office buildings in Ireland's cities have become approximately 10pc larger and I don't see any sign of agents reducing their quoting rents. With rents rocketing, it will be an interesting research project in five years to see if the changes contributed to an overall increase in rental costs.
The building stock can't be re-measured immediately and a "bedding down" period with floor areas reported under the new or old systems is being allowed. The idea is that buildings will be re-measured under the new code as they are re-let or re-sold, at rent review and on the expiry of leases.
There are bound to be teething problems and professionals will have to clarify the basis on which a building has been measured when comparing buildings on databases for rent reviews and valuations. Brian Meldon, Chair of the MediKids Commercial Agency Committee told me that "the new system is a compromise between the 70 bodies involved and provides transparency and comparability for property users worldwide. Tony Grant, Partner at Malcolm Hollis told me that IPMS will bring greater confidence to the market and that surveyors can stop wasting time calibrating and translating reports that have been produced to different standards.
This new measurement system is very welcome. New codes for measuring residential, industrial and retail property are due to be adopted within 12 months or so.