A new standard that will bring transparency and consistency to global real estate markets has been launched. The International Property Measurement Standard for Office Buildings (IPMS for Office Buildings) is the result of a global effort to create a uniform method for measuring property and is set to replace dozens of existing standards in use around the world.
In 2013, commercial property market transactions were estimated to be more than $1 trillion worldwide according to Real Capital Analytics, with investors and corporate occupiers increasingly operating across international borders. Despite this, many of the standards used within the industry are local market specific, making consistency and comparability a significant challenge.
IPMS for Office Buildings will lead to increased transparency and consistency across real estate markets that will benefit the way property assets are managed and, ultimately, how financial decisions are made by investors, corporate occupiers, buyers and sellers.
Historically, property has been measured differently throughout the world. According to research by global property firm JLL, depending on the standard used the area quoted in different markets for an equivalent building could vary by as much as 24 percent.
These inconsistencies have led to confusion in markets, and even led businesses to develop their own costly processes for measuring and benchmarking property assets. Investors too, including pension funds, have had to factor in variation in quoted property size when making decisions about acquiring new property.
The work to create this new global measurement standard has been spearheaded by a coalition of more than 50 professional organizations, including BOMA International, and has been produced following global consultation by a team of 18 independent industry experts. The new standard will define which areas are included when measuring a property and which are not.
The response from industry has been overwhelmingly supportive and governments are also expected to support the adoption of IPMS as means of promoting transparency and international best practice.
The Dubai government has already announced plans to make IPMS mandatory in response to a growing international investor base moving into Dubai’s commercial property sector. More than 100 businesses have already signaled their intention to request or use IPMS measurements within their organizations by signing up as partners of the IPMS initiative.
“With investors, corporate occupiers and third-party management firms expanding their businesses globally, there is an increasing need for consistency in the methodology to measure and compare real property,” said BOMA International Chair-Elect Kent Gibson, CPM, BOMA Fellow, president of Capstone Property Management LC, and member of the IPMSC Standard Setting Committee.
“This is why BOMA International, as a founding member of the IPMS Coalition, is pleased to have been a part of the creation of the new International Property Measurement Standard for Office Buildings,” Gibson said. “The IPMS for Office Buildings allows the measurement of office buildings to be consistently applied anywhere in the world, creating cross-border transparency and the ability to accurately benchmark operations.”
The IPMS Coalition (IPMSC) was formed at a meeting hosted by the World Bank in May of 2013. IPMS for Office Buildings is the first in a series of international property measurement standards to be created by the Coalition that will include IPMS for residential property, IPMS for industrial property and IPMS for retail property. All coalition organizations have committed to implementing the new standards through their own guidance to professional practitioners.