When occupiers are in the market for commercial space, the square footage they are seeking – as well as the location – dictates the options available.
But as the process moves along, the specific square footage, which will be listed on the lease, begins to matter less and less, and how well the tenant will fit into that space matters more and more.
When a Square Foot Isn’t a Square Foot
While a square foot may seem like a very consistent unit of measurement, it becomes somewhat less so when looking at commercial real estate locations.
The standards by which properties are measured are created by the Building Owners and Managers Association (BOMA), and have been updated on a regular basis since the first Office Standard was published in 1915.
The most recent update – published last fall – included several updates. The most significant change in terms of offices specified that outdoor areas dedicated for one tenant’s use – such as a private roof deck or balcony on one of its floors – can be included in the rentable square footage of the space.
With multiple updates and modifications during the past 100+ years, the spaces a company may be considering might be measured using several different methodologies. And what was a 25,000 SF floor in 2005 might now be listed closer to 27,000 SF.
“The measured square footage of a particular floor or building will likely change multiple times over its lifetime as measurement standards are updated and modified,” says Lauria Brennan, a Senior Director at Cushman & Wakefield. “The specific number isn’t nearly as relevant as how a particular tenant will actually fit there.”
Multiple Factors Impact Fit
Once tenants reach a certain point in their decision-making process, they begin to work on fit plans to determine how they might lay out their space in each potential property option.
The most important factor is that each building – very obviously – has floors which vary widely in size and are laid out very differently. The same company looking at space at 28 State Street, which has a rectangular footprint, would lay out their office very differently at 175 Federal Street – which has more of a rhombus shape.
As an occupier works to develop their fit plan, their architect will need to account for the tenant’s needs in terms of meeting rooms, offices, and other features, as well as the placement of elevators, mechanical systems, columns, and other building factors.
If a tenant isn’t looking to take the entire floor or available block of space, the landlord may also factor into the discussion. Depending on the economics of the situation, a landlord may not be willing to pay for the subdivision of a floor. In that circumstance, the tenant can either use the excess space for additional conference space or other amenities, or look to sublease it on a short or long-term basis – a decision which needs to account for the company’s growth goals and projections.
Focus on the Holistic View
While it’s important to understand how the square footage tenants are paying for is measured, the best way to fully evaluate different options is to look beyond the square footage of the space, and focus on the overall picture in terms of economics and workplace advantages each space may represent.
“When you come down to it, the decision needs to focus on the overall economics of the lease itself,” says Brennan. “Each option will have positives and negatives, and it’s up to the tenant and their commercial real estate broker to make the best decision.”