The Real Deal New York

Proposal for measuring office size could cost landlords money

But building owners in New York City not likely to adopt global standard

May 28, 2014 09:00AM

mark-weiss-metlife

Mark Weiss and 200 Park Avenue

The International Property Measurement Standards Coalition, a global alliance of real estate groups, intends to unveil a new system next month for measuring square footage at office buildings worldwide. The system would not be mandatory, and could reduce the size of buildings and therefore lessen their value.

New York City real estate executives, however, said it is unlikely that building owners will voluntarily follow the new standards if it could result in losing money.

“It’s an important enough market that they can make their own rules,” Mark Weiss, vice chair of Newmark Grubb Knight Frank, told the Wall Street Journal.

Most major city landlords have increased loss factors over several years, as TRD reported. Tishman Speyer’s MetLife Building at 200 Park Avenue is currently measured to be 3 million square feet, but 35 years ago, when it was the Pan Am Building, it was measured as 2.4 million square feet. [WSJ]Mark Maurer

5 Responses to “Proposal for measuring office size could cost landlords money”

  1. May 28, 2014 at 9:57 am, PropertyMan said:

    Bizarre that people think this will ‘change values’. The market sets the value, not a measurement.

    International standards are the only way to create consistency and
    transparency.

    In reality, an international standard would just change the
    ratio of $ per sq-ft so that you would have one value of $/sq-ft based on
    existing (inconsistent) measurement standards and another $/sq-ft using an
    international standard. The only
    difference would be that an international standard would standardise $/sq-ft
    across international real estate markets.

    Just because a property is measured at 2.4m sq/ft one day
    and 3m sq/ft the next, doesn’t change the market value of the property – it doesn’t
    actually grow, physically!

    • May 28, 2014 at 10:15 am, HughGass said:

      The market sets a value, yes. The market sets a loss factor too. When one goes up, the other doesn’t go down to make equivalent. And vice-versa. When the market dictates, they both go up … they both go up. Accordingly, so does value.

      • May 28, 2014 at 12:35 pm, PropertyMan said:

        But an international standard would make the process of defining loss factor that much more transparent, would it not?
        Market value of ‘space’ is determined by what someone is willing to pay; loss factor, in reality, is (or should be) defined by the physical characteristics of a property.
        Only an internationally agreed standard could allow for a fair assessment of loss factor.

  2. May 28, 2014 at 10:28 am, Hypsometric said:

    My construction/surveying tech company, Hypsometric, had to stop reporting exact sq. ft. bc clients could not manage expectations due to the delta!

  3. May 30, 2014 at 1:37 pm, David Brown said:

    “Voluntary” until the day lawyers figure out there is a significant difference. Then it is class action time. Smart developers will adopt the international standards, fly by nights will fight all the way.

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