When it comes to the subject of taking up space these days, most of the attention is placed on the occupier, with the space being taken up often relegated to an afterthought. However, in the world of corporate real estate and workplace management, a small misaligned understanding of what “net area” means could potentially lead to catastrophic consequences and costs.
“Great things happen when the world agrees.” —International Organization for Standardization
What are standardisation organisations?
As globalisation connects people, businesses, and cities around the world, one of the challenges of international business is laying a common groundwork for understanding. Beside the International Organisation for Standardization, or ISO, there are several other organisations that publish guidelines on valuation standards. Some, like European Standards (EN) and The European Group of Valuers’ Associations (TEGOVA), publish standards adopted and approved for use across an economic region such as the European Union. Others, such as the Deutsches Institut für Normung (DIN) and the Asociación Española de Oficinas (AEO), operate with the specific aim of promoting and defining activity in country-specific markets like Germany and Spain.
Although their main aim is to eliminate barriers to business and trade, the different schools of standardisation which exist occasionally confound more than they enlighten. There probably is no better example of this in corporate real estate than the definition of “net area”: depending on which school of standardisation is employed, the same term can be taken to mean two very different concepts.
The difference between EN and BOMA standards
Since April 2012, the usage of the European Standard EN 15221-6 has been mandatory in the European Union. Across the pond, the Building Owners and Managers Association, BOMA for short, is a federation of US associations and global affiliates that have established a standard together with the American National Standards Institute (ANSI) to maintain floor measurement standards for property types such as office spaces. As the leading association for corporate real estate professionals in the US, BOMA is employed by many organisations based or headquartered in the US.
The European Standard: EN 15221-6
The European Standard uses the following terms to measure office space:
- Gross floor area: The total area of a building, calculated on a floor-by-floor basis, enclosed by the outer building’s outer walls.
- Net floor area: Commonly also referred to as “net area”, the net floor area is derived when the construction area, or the outer walls of a building, is deducted from the gross floor area. The space contained within the net floor area falls into one of four categories:
- Technical area: These are the technical rooms, air shafts, and server rooms of a building.
- Circulation area: In layman’s terms, these are the walkways on an office floor.
- Amenity area: Amenity areas includes toilets and kitchens used by the tenants or occupants.
- Primary Area: Finally, this is the main usable area which serves to fulfill the purpose for which the building is rented.
The American standard: ANSI/BOMA Z65.1
BOMA standards for office space employ the following definitions:
- Gross area: The total area of a building, calculated on a floor-by-floor basis, enclosed by the outer building’s outer walls. (This is more or less the same definition as outlined by the European Standard.)
- Rentable area: The rentable area is derived when all the building’s common areas such as elevator shafts and staircases are deducted from the gross area. This is the area a landlord typically rents out to a tenant, hence its name.
- Usable area: The usable area is derived when all the spaces that serve every tenant in the building such as lobbies and toilets are deducted from the rentable area. (Although occasionally, sharing the kitchen and toilet facilities with other tenants can make things slightly more complicated, as the rented space cannot be measured directly using the floorplan. In these scenarios, a common area factor is typically applied.)
- Circulation area: The ANSI/BOMA standards make a point to further categorise circulation areas into either primary or secondary circulation areas. Primary circulation would be the paths from the entrance door to the kitchen area, desks, elevators, and toilets. Secondary circulation would be the paths from desk to desk.
- Net area: Finally, the net area is derived when the primary and secondary circulation areas are deducted from the usable area.
EN vs BOMA space definitions
Herein lies where the main confusion comes from when it comes to talking about corporate real estate in an international context. While the European Standard definition of “net area” includes circulation area or walkways, by most American standards, “net area” does not. Thus, when two workplace managers look at the same building, how they define and measure space depends entirely on the standards they use.
EN 15221-6 vs ANSI/BOMA Z65.1
- EN (European Standard) defines net area as including circulation area, or walkways.
- BOMA does not count circulation area in net area. Instead, circulation and net area together form the usable area.
- The EN definition of net area is roughly comparable to BOMA’s definition of rentable area, as both exclude the outer walls or construction area of a building. However, there are still small differences between the two: BOMA also excludes vertical penetrations, or elevator shafts from the rentable area.
- The BOMA definition of net area is much closer to EN’s definition of primary area.
So should an organisation use EN 15221-6 or ANSI/BOMA Z65.1?
What adds to the confusion is that even within the same organisation, different offices may employ different measurement standards. A satellite office in Germany, for example, may calculate their floor spaces using EN or the national German standard DIN, whilst the organisation’s headquarters may use ANSI/BOMA. A lexical slip-up when talking about “net area” can mean a misunderstanding of hundreds of thousands of square feet—or metres! Imagine what that could mean in costs when misunderstanding the terms of a lease.
When it comes to talking about net area, circulation area, or any other spaces, there’s no standard which is better than the other. The most important thing to keep in mind is to always clarify terminology and measurement standards upfront.
Whether your organisation uses ANSI/BOMA or the European Standard, Locatee helps you measure your space occupancy. Take a look at how to measure and monitor your entire portfolio’s health with the Locatee Portfolio Insights:
Questions? Contact us!