BOMA, which stands for Building Owners and Managers Association, is a commercial real estate trade organization that develops and maintains standards for measuring building size and space utilization. Established in 1907, BOMA has become the de facto organization that determines how professionals measure square footage across the commercial real estate industry in the United States and parts of the international community. Per their website, the group “represents the owners, managers, service providers and other property professionals of all commercial building types, including office, industrial, medical, corporate and mixed-use.” (BOMA, 2024)
BOMA standards and measurements are how investors in the commercial real estate space determine the square footage (and, in return, rents) associated with each asset class. It is essential that standards exist; they ensure consistency and uniformity in measuring floor area across different buildings. This consistency is necessary for fair comparison between properties and for establishing accurate rental rates. This uniformity and transparency help create fewer disputes over square footage and what the tenants pay for.
BOMA is a trade organization for building owners and managers, not for tenants. Tenants need to understand that BOMA does not work for their interests. While BOMA standards create uniformity across the industry, they are also designed to benefit landlords and owners. Therefore, with each new iteration of BOMA standards released, individual spaces’ square footage tends to get larger rather than smaller. With this incentive, building owners can “re-measure” the space to their benefit as often as possible.
It’s essential to have a competent broker and attorney to help you negotiate proposals or lease documents regarding how a space is measured. A competent broker or attorney will understand how to craft documents to a Tenant’s benefit and ensure that the square footage and rent you pay do not change during or just before the start of the lease term.
In many cases, the Landlord may re-measure a building and find increases in square footage in some spaces while finding decreases in others. Although unethical, some landlords may not always update all the spaces; they only update the ones that benefit them. The tenant is responsible for finding the discrepancy.
Because BOMA standards are created in a landlord’s favor and are the industry standard for determining square footage, landlords should re-measure their space regularly to ensure the building is comparable to peers in the marketplace. Commercial real estate values are typically based on the income they produce, so correctly updating space measurements can increase the value of future sales. While the building may not have physically changed, the calculation method may have, and it can create more total income for the property.
During lease negotiations, a competent leasing broker or attorney will ensure reasonable protections and periods for the re-measurement of space. There may be scenarios where the previous owner may have under-measured the actual square footage of a space. In this scenario, it would produce a windfall for that specific tenant and ultimately hurt the value of your investment. Having the right to ensure accurate measurements will help ensure accurate market value and that you are competitive with the marketplace.
Usable Area: Also known as net rentable area, usable area is the actual space within a building that tenants can occupy and use for their business operations. This area typically excludes common areas such as hallways, columns, walls, or other amenities such as a fitness center. It is the space a tenant walks around in. Rentable Area: Also known as leasable area, is the total floor area within a building that can be leased to tenants. It includes all usable areas plus a portion of common areas such as corridors, lobbies, elevators, and restrooms. You calculate the Rentable area by adding the usable area of each tenant space to a proportionate share of the common areas based on a predetermined allocation method such as BOMA. A tenant pays rent on the rentable area. Load Factor (Add-on Factor): Also known as add-on factor or loss factor, load factor is used in commercial real estate to quantify the difference between the Rentable and usable areas in a leased space. It represents the percentage of common areas within a building allocated to a tenant in addition to their usable space. Described in a formula, a Load Factor looks like this: Load Factor (%) = (Rentable Area – Usable Area) / Usable Area * 100
