Why It's Important to Understand the BOMA Standard
When leasing office space, most entrepreneurs encounter seemingly confusing terms: rental area, usable area, gross area, BOMA coefficient. Often, it turns out that the actual area you can use for work is smaller than what you have to pay for. This is not fraud by the landlord, but standard practice based on international methods of calculating office space.
The BOMA standard was developed to create a unified, transparent and fair approach to measuring commercial real estate. Understanding what the BOMA coefficient is and how it is calculated helps tenants correctly assess rental costs, compare different market offers, and avoid misunderstandings with property owners. For owners and management companies, using the BOMA standard is a sign of professionalism and compliance with international practices in commercial real estate.
What Is BOMA: History and Purpose of the Standard
BOMA (Building Owners and Managers Association International) is an international association of commercial real estate owners and managers founded in the USA. The organization unites thousands of real estate professionals from around the world and establishes industry standards. One of BOMA's most important achievements was the creation of a unified methodology for measuring office space, allowing all market participants to speak the same language.
Before the BOMA standard appeared, each owner or developer could interpret differently what was included in the rental area and what wasn't. This led to confusion, conflicts, and the inability to objectively compare market offers. The BOMA standard solved this problem by introducing clear rules for measuring and calculating different types of areas in commercial buildings. Today, this standard is recognized and used in most countries worldwide, including Ukraine, where modern business centers follow this methodology.
Main Types of Areas According to BOMA Standard
Usable Area
Usable area is the part of a space that a tenant can physically use for their needs. This includes employee workstations, meeting rooms, offices, kitchens, bathrooms within the office, server rooms, archives, and break areas. Simply put, it's everything within the walls of your leased space that can be used for company operations.
When measuring usable area, the space from the interior surface of the building's external walls to the center line of partitions between adjacent spaces is taken into account. If your office has columns inside, they are also included in the usable area, as you lease the entire space within the premises. Usable area is the figure that interests tenants most from a practical standpoint, as it's the amount of space you have for organizing workstations.
Rental Area
Rental area is always greater than usable area because it includes a share of common areas used by all tenants. The rental area includes your usable area plus a proportional share of common floor areas: corridors, lobbies, common bathrooms, technical rooms, and elevator shafts. This is the area you pay for to the building owner.
The logic is simple: common areas are necessary for the building's operation, and their cost is fairly distributed among all tenants. You use corridors to reach your office, bathrooms on the floor, elevators to move between floors. All these spaces take up room in the building, and their maintenance costs money. Therefore, part of their area is added to your usable area when calculating rent.
Gross Building Area
Gross building area is the sum of all areas on all floors, including exterior walls, technical floors, parking, vestibules, and all engineering equipment. This indicator is used by owners for overall planning and property assessment but rarely has practical value for tenants. It's the maximum possible building area, accounting for absolutely everything under the roof.
What Is the BOMA Coefficient
The BOMA coefficient, or Load Factor, is a numerical indicator that reflects the ratio between rental and usable area. This coefficient shows how much common area falls per square meter of your office's usable area. Simply put, if your office's usable area is one hundred square meters and the BOMA coefficient is 1.15, then the rental area you pay for will be one hundred fifteen square meters.
The BOMA coefficient is always greater than one because rental area always exceeds usable area due to the presence of common zones. The lower the coefficient, the more efficiently the building is designed in terms of space utilization. A high coefficient means that a large portion of the building's area consists of common areas, corridors, and technical spaces, making the lease less favorable for the tenant.
BOMA Coefficient Calculation Formula
The basic calculation formula is very simple: BOMA coefficient = rental area / usable area. However, behind this simple formula lies a complex methodology for measuring each type of area according to standard rules. Incorrect measurements will result in an incorrect coefficient, and thus an unfair distribution of costs among tenants.
For example, if your office's usable area is 80 square meters and the rental area is 92 square meters, then the BOMA coefficient will be 1.15. This means that for each square meter of usable area, there's an additional 15% of common areas that you also pay for.
ANSI/BOMA Z65.1 Standard: Official Methodology
The full name of the current standard is ANSI/BOMA Z65.1, where ANSI stands for American National Standards Institute. This document was approved as the official US national standard and recognized by the international community as the most professional approach to measuring office space. The standard is regularly updated to reflect current market realities and needs.
Method A: The Most Common Approach
The BOMA standard offers several calculation methods, but Method A is the most widespread in the world. This method is used in the vast majority of modern office buildings and business centers. Method A involves calculating common areas at the floor level and distributing them proportionally among all tenants on that floor.
According to Method A, all common floor areas are divided among tenants proportionally to their usable area. If you lease half a floor, then you receive half the area of corridors, bathrooms, and other common areas on that floor. This is a fair approach that ensures each tenant pays for common areas proportionally to the space they occupy.
What Common Floor Areas Include
Common floor areas under Method A include all spaces used by multiple tenants: floor corridors and lobbies, common bathrooms, technical rooms, service personnel rooms, communications shafts that run through the floor. All these areas are measured separately and distributed among tenants.
It's important to understand that building-wide common areas such as the main lobby, reception, conference rooms, and parking may be calculated separately or not included in the floor coefficient at all. This depends on the specific building's policy and agreements between the owner and tenants.
Typical Coefficient Values
1.00-1.10 — considered a very good indicator of building efficiency. This means common areas occupy minimal space, and most of the area is used for leased offices. Such buildings are optimally designed in terms of space utilization and are most attractive to tenants.
1.10-1.20 — is standard for most office buildings. This is a normal indicator reflecting the need for certain common areas for comfortable building operation. Most modern business centers fall within this range.
Above 1.25 — considered high and may indicate inefficient use of building space. This can be related to architectural features: wide corridors, large lobbies, excessive technical rooms, complex floor configuration.
Why the BOMA Coefficient Is Important to Tenants
Comparing Different Market Offers
Understanding the method of calculating office space allows objective comparison of different rental options. An office of one hundred square meters with a coefficient of 1.05 actually has less usable space than an office of the same area with a coefficient of 1.15. Without understanding the BOMA coefficient, it's impossible to make the right choice.
Calculating Real Rental Costs
Knowing the BOMA coefficient, you can calculate the real cost per useful square meter. If the rental rate is a certain amount per square meter of rental area, then the real cost per useful square meter will be higher by the coefficient size. This helps properly plan your budget and understand the true economics of renting.
Planning Workstations
Understanding the difference between usable and rental area helps properly plan the number of workstations. If you need to accommodate a certain number of employees, you should focus on usable area, not rental area. Planning errors can result in the leased space being too cramped for your needs.
Conclusion
The ANSI/BOMA Z65.1 standard and the BOMA coefficient have become an integral part of the professional office real estate market worldwide. This methodology ensures transparency, fairness, and the ability to objectively compare different real estate properties. Understanding what the BOMA coefficient is and how it is calculated is basic knowledge needed by anyone involved in leasing office space.
Method A of the BOMA standard, which is the most widespread approach to measuring office space, provides clear rules for calculating usable and rental area. Although rental area always exceeds usable area due to the need to distribute common areas, this mechanism is fair and logical. The key is transparency of calculations and understanding by all parties what exactly the tenant is paying for.
The modern commercial real estate market is moving toward greater transparency and standardization. Using BOMA methodology is a step toward civilized relations between tenants and owners, where there is no room for manipulation and misunderstandings. Invest time in understanding these standards, and you'll be able to make more informed decisions and save significant sums when leasing office space.
FAQ
Why do I have to pay for area I don't use?
You use common areas—corridors, bathrooms, elevators. Their maintenance costs money, so the costs are fairly distributed among all tenants proportionally to the area they occupy.
Can I demand a rent reduction due to a high BOMA coefficient?
The BOMA coefficient is a technical indicator reflecting the building's structure. You cannot demand its reduction, but you can use this information to negotiate rental rates or choose different premises with a better coefficient.
How do I find out the BOMA coefficient for a specific building?
Simply ask the owner or management company. Serious market participants always provide this information. If you are denied the coefficient, this could be a warning sign.
Can the BOMA coefficient change over time?
The coefficient can change if the building is remodeled, common area configuration changes, or new area measurements are taken. However, the coefficient typically remains stable over long periods.
What's better: low rental rate with high coefficient or high with low?
Always calculate the cost per useful square meter. Multiply the rental rate by the BOMA coefficient—this will give you the real cost of usable area. Compare these indicators for different offers.