How to Measure a Commercial Building Correctly

Do you know the correct way to measure a commercial building? As simple as this sounds, it is very common to have commercial buildings mis-measured thereby creating a value loss for the Seller/Lessor or Buyer/Lessee, depending on whether the measurements are overstated or understated.

While it is true that a town's assessor's field cards are a pretty good indication of a building's size, it is incumbent on the interested party to perform actual field measurements in order to get an accurate reading. Whether the structure be a shopping center, office building,warehouse, manufacturing facility or a mixed-use building, the building should be measured to the outside walls resulting in the building's gross square footage.

It is important to distinguish between "gross" (rentable) square footage and "net" square footage which is the building's actual usable square footage. The difference between the gross and net square footage is a building's common area factor also referred to as a building's loss factor. For example, if a property such as a typical suburban office building has a 15% common area factor, with the gross square footage being 10,000 sq.ft., then the building has net usable space of 8500 sq.ft. (10,000 - 1500). The building would be considered 85% efficient (8500/10,000). Although a tenant who occupies this entire hypothetical building 10,000 sq.ft., and he or she actually is using 8500 sq.ft., the rent and building's value is calculated based on the "gross" square footage of 10,000 and not on the net (also known as usable)square footage of 8500.

While most of the professionally managed larger commercial buildings in the area are measured by a professional thereby rendering accurate measurements, many of the smaller commercial buildings do not receive this professional attention, and unfortunately, there are a surprising number of instances where the measurements are inaccurate.

Not only can significant dollars be gained or lost, but also strained relationships are usually another unfortunate result of inaccurate measurements.