I n my opinion, there are three books that all Chartered Surveyors should read. “Property and Money Paperback” (1998), by Michael Brett, “Real Estate Investment: A Strategic Approach” (2022), by Andrew Baum, and “Measuring America” (2002), by Andro Linklater.
The first two are wonderful in placing real estate at the centre of the business world by providing insights into the importance of property to society and commerce. But the third, with its misnomer of a title – as it is not just about America – is about the fundamental concept of enclosing space and creating ownership.
To paraphrase Linklater: “Measurement is fundamentally important as it allows the exchange of goods, services and space. It is almost as important to human society as language. It underpins co-operative activity, allowing economies to develop matching barter, cash and credit to whatever is owned by one person and desired by another.”
Measurement is a global necessity. In fact, when I was running international conferences, one of the best ground-breakers at the formal dinners was to ask each table – made up of numerous different nationalities – to identify things that are measured in the same units in all countries around the world. Some of the answers (I won’t tell you them all) are obvious, such as electrical current, measured universally in amps. Some are surprising, albeit obvious when considered, such as all air traffic control uses feet. Even in countries that use the metric for the normal measurement of length, all airspace must use imperial measurement wherever they are in the world, as a lack of consistency can lead to confusion and, potentially, disasters.
The measurement of property
Consistency is also at the heart of measurement for all properties, whether for sale, rent or valuation. We are not just talking about consistency in terms of the unit of measurement; consistency is also needed in the terms of reference about what is included and excluded from the area to be measured. These decisions on what is the appropriate basis of measurement need to be internationally accepted and aligned to ensure fairness and transparency for all stakeholders.
In simple terms, a building can be measured looking at the internal dimensions only, or it can be measured externally so the width of the building’s envelope is also included. However, both measurements may be reported with a lack of precision and just called the “area” or “size” of the building, without anyone realising that the measurements are not comparable. If you are charging a rent for each square unit of that building, the difference between each total area can have a significant effect on the total rent paid. This is an avoidable error that has been introduced due to a lack of clarity and precision in reporting standards.
As noted in Linklater’s book, often these potential problems are avoided within local markets by the adoption of a norm; a heuristic within the market where everyone conforms to the same basis. But this is localised and sometimes varies between different locations within the same city. If you want global consistency, you need international standards and a commitment and desire of all parties to agree and police the same.
Ambiguities around space make it difficult for global investors and occupiers to make informed business decisions on space requirements.
International property measurement standards coalition (IPMSC)
Ten years ago, the International Valuation Standards Council (IVSC) was having this very discussion. I remember sitting in various meetings saying all the above and anchoring my argument with the mantra that International Valuation Standards require International Measurement Standards. This coincided with a global zeitgeist as, in a surprisingly short period of time, the IVSC and various other global organisations established the International Property Measurement Standards Coalition (IPMSC) to produce the necessary International Standard for Measurement (IPMS).
The first standards were published in 2013 but this year sees a new, more comprehensive version called the “IPMS: All Buildings” published. In the words of Paul Bagust, the Chair of the IPMS Coalition, these standards are important as “consistent measurement … has never been more critical.”
Standards and consistency
But standards alone won’t necessarily solve the problem unless property professionals are encouraged to apply the standards consistently for all purposes. This isn’t always easy. A letting agent may wish to advertise space on an external basis, whilst a valuation surveyor, for the same space, will need to look at the internal area. The difference between the two for, say, an industrial building might be 3%-4%. Yet, sometimes, letting details will just state the size with no indication of the basis, and the valuation surveyor won’t know whether it is external or not. In this context, the Royal Institution of Chartered Surveyors advises their members “to advise their client or employer on the benefits of using IPMS.”
RICS also require its members to be honest, transparent, and avoid misleading statements, such as overstating measurements or not being clear on the basis of measurement.
But it is difficult to police the use of standards by everyone. Even if that were to be, the standards themselves aren’t being avoided; the problem is that the standards are being used but not communicated. Maybe we need to reinforce the requirement for all measurements to state the basis of measurement along with the number itself? Maybe we need to ensure that, in the example above, both internal and external measurements are reported? But what is clear is that the IPMS are a foundation on which we can all build. Often, inconsistency happens because of a lack of precision; because the agent/valuer or surveyor follows an historic or locational convention. With time, the IPMS will establish themselves and that will be, pun intended, the measure of their success.
