Insight: Office

PGF 11 SA V Royal & Sun Alliance Insurance (2010)

In 2008, the claimants, PGF, were the landlord of a six-storey office building in Lime Street in the City of London. The building was let to Royal & Sun Alliance (the first defendant) under a 35 year lease until 24 June 2008 and, in turn, sub-let to London & Edinburgh Insurance (the second defendant) on a sub-lease expiring four days before the expiry of the head lease.

Imminent changes to the way that offices are measured

From 1st January 2016, the ‘RICS Code of Measuring Practice (6th edition) 2007’ will no longer apply to the measurement of office property. The ‘International Property Measurement Standards (IPMS): Office Buildings’ outlines the new global standards for the measurement of office buildings and following these will be mandatory for RICS members. The measurement of residential, industrial, retail and mixed use buildings is however still governed by ‘RICS Code of Measuring Practice (6th edition) 2007’.

New definitions will be adopted which equate closely (but not exactly) to former terms:

  • IPMS 1: this equates closely to GEA (gross external area)
  • IPMS 2 – Office: this equates closely to GIA (gross internal area)
  • IPMS 3 – Office: this equates closely to NIA (net internal area)

The changes from the old to the new definitions include:

  • IPMS 1: covered galleries, balconies and accessible rooftop terraces are included in measurements but stated separately
  • IPMS 2 – Office: the sum of the areas of each floor are measured from the internal dominant face* and reported on a component-by-component basis for each floor of the building (e.g. vertical penetrations, structural elements, hygiene areas, workspace etc.).
  • IPMS 3 – Office: all internal walls (both structural and non-structural) and columns (both structural and non-structural, island and engaged) within an occupiers exclusive area are included, half of the area of a wall with an adjacent tenant is included, areas occupied by the reveals of windows when they are assessed as the internal dominant face* are included, limited use areas and unusable space (between island columns and walls for example) are included

*The internal dominant face is defined by IPMS as being ‘the inside finished surface comprising 50% or more of the surface area for each Vertical Section forming an internal perimeter’.

The above is just a summary, listing some of the important changes that will be implemented in the New Year. For the full list of changes and discussion, please see the ‘RICS Property Measurement (1st edition) 2015’ document.