A new international standard has been released for the measurement of office buildings with the goal of bringing greater consistency and transparency to commercial property transactions around the globe.
The new International Property Measurement Standard for Offices has been developed by a coalition of over 50 industry stakeholders to in order to produce a uniform method for assessing area and space in office properties.
The new standard will replace a broad array of standards that are currently being used in different parts of the world, providing uniform guidelines to which parts of a property should and shouldn't be included during measurements of building space.
The standards dictate, for example, that patios and decks at ground level, external car parking, equipment yards, refuse areas and other ground-level areas that are not completely enclosed should not be included in the assessment of an office property's area.
The coalition believes the new standard will improve the management of property assets and vastly increase the level of consistency and transparency in commercial real estate transactions.
According to research by global real estate consultancy JLL, disparities in local measurement standards can lead to huge divergences in the areas quoted for the same property in different markets, with variations running as high as 24 per cent.
The sheer scale of these variations in tandem with the huge size of the international commercial property market and the increasing prominence importance of cross-border transactions makes standardisation an issue of critical importance.
"Globalization is not a coming trend - it is here and it is a fact of life," said Lori Burger, president of the Chicago-based Institute of Real Estate Management. "There continues to be a steady increase in cross-border investments and in international capital flows. In what has become a global real estate market, the need for transparency, for a common language, and for international standards becomes paramount."
The Property Council of Australia has hailed the release of the IPMS for office buildings, while also pointing out that Australian businesses will not need to alter current practices, given the similarities between the new international standards and methods long employed domestically.
"Australia already has a clear and consistent set of definitions, standards and explanatory materials for the measurement of commercial premise," said Property Council of Australia chief executive Ken Morrison with reference to the Method of Measurement guide developed by the council. "The International IPMS Coalition - of which Property Council is a member - has recognised this, with the IPMS for Offices closely mirroring the Method of Measurement's principles.
"There is no need for Australian companies to change their practices as a result of this release. The Method of Measurement will remain Australia's preeminent guide for measuring commercial premises."