From 1 January 2016 RICS professionals that undertake or commission property measurements of offices must comply with the new Professional Statement: Office Measurement. The Statement updates the 6th edition of the RICS' Code of Measuring Practice which is often referred to in property documentation in the context of a definition of gross external area (GEA), gross internal area (GIA) or net internal area (NIA) and introduces the International Property Measurement Standards (IPMS).

The first edition of IPMS looks specifically at office buildings (Professional Statements for other property classes including residential, industrial and retail are being discussed and it is expected they will be added over time as the IPMS is expanded). The Statement requires that all coalition organisations commit to implementing the new standards through guidance to their professional members and, as such, from January 2016 the Statement introducing IPMS became mandatory for chartered surveyors unless local laws or a client require an alternative.

The new measurement practices were introduced as the highly localised property measurement practices were causing confusion and uncertainty in many cross boarder property transactions (the difference in the measurement of floor space can be up to 24%). As the real estate industry and financial markets are increasingly global in nature, it was recognised that measuring office spaces in a consistent way around the world is essential to allow cross boarder comparison, encourage international investors and simplify benchmarking for occupiers.

The Statement uses different terminology in respect of measuring of the office space to the one used in the RICS Code and it sets out what should and what shouldn't be included when measuring office floor space. IPMS1 is used particularly in planning context and compares closely to GEA with some differences, IPMS2-Office (used in costings context) compares closely to GIA, and IPMS3-Office is used in the context of agency and valuation, taxation and property and facilities management, and aims to compare closely to NIA. IPMS3-Office, however, contains the largest number of differences between the old and the new measure.

NIA, broadly speaking, is the usable area within a building measured to the face of the internal finish of perimeter or party walls ignoring skirting boards and taking each floor into account ('an area is useable if it can be used for any sensible purpose in connection with the purposes for which the premises are to be used' - Kilmartin SCI (Hulton House) Ltd v Safeway Stores plc [2006]).

This approach is ignored by IPMS3-Office. All RICS members must now measure to the internal dominant face, i.e. 'the inside finished surface comprising 50% or more of the surface area of each vertical section forming an internal perimeter'.

IPMS3-Office indicates the floor area available on an exclusive basis to an occupier but excluding standard building facilities (parts of the building providing shared or common facilities that typically do not change over time including stairs, escalators, lifts, elevators, toilets, cleaners cupboard etc.), and calculated on an occupier-by-occupier or floor-by-floor basis for each building. All internal structural walls, columns, piers, areas less than 1.5m in height, internal accessways within an occupant's exclusive area are included within the measurement.

Where there is a common wall with an adjacent tenant, the measurement is to the centre-line of the common wall. Covered galleries and balconies that are for exclusive use of one tenant are included. Therefore, in a number of instances measurements based on IPMS may lead to notable differences in the quoted floor area for office spaces which could affect rents.

Existing leases which have been agreed using existing measurement methodologies are likely to remain in place and will not be reviewed in light of the new standard (the launch of IPMS for Offices does not require all properties to be re-measured immediately). IPMS will most likely be adopted at lease renewal periods.

Although the Professional Statement deals only with measurement and not with valuation (i.e. it does not indicate how value is apportioned to different categories of space, limited use areas etc and valuation of office space is still left to the judgment and experience of the valuer, agent or developer), the danger for tenants is that landlords could see the new measurement practices as a convenient mechanism to increase rents.

The price per square meter/foot could change when using a different measurement standard and rents based on IPMS3-Office measurements are likely to upset tenants. As such tenants (and funders, investors, land owners) should be advised of the potential consequences of the IPMS3-Office, employ an independent surveyor to compare NIA and IPMS3, ask whether the asking rent is based on NIA or IPMS3-Office, and to ensure the lease refers to NIA rather than IPMS3-Office.

If a difference in measurement of office space is significant when using IPMS3-Office measurement practices, tenants should resist adoption of these (written instructions should be sought to that effect).

The issue of measurement standard may, therefore, become a contentious point between landlords and tenants when negotiating rents. Although it is anticipated that IPMS will be increasingly demanded by investors and the measurements of office buildings will change in line with the new IPMS providing transparency across multiple global regions of all offices, it remains to be seen whether the new measurement practices will affect the way landlords value rents on office spaces.