Add-on factor, Load Factor A, R/U Ratio, R/O Ratio

The common floor area and the building area in office buildings are currently assigned to individual lease areas of the tenants proportionally to the area they’re leasing. How it’s done, how it’s calculated and what’s most important, which norms are appropriate for such situations.

Add-on factor only in the BOMA Standard

I’ll begin with the last issue of the above, as it is the most important. The method of calculating the add-on factor is described (a detailed way of calculating is provided) only in the BOMA norm (ANSI/BOMA Z65.1-210 Office Buildings: Standard Methods of Measurement, Method A). In all other norms (Tegova, RICS, GIF, PN-ISO) it’s not described at all. The terms “floor add-on factor” and “building add-on factor” are not present at all, but the tenants’ ignorance results in managers and architects coming up with very creative ideas of how to calculate them. It’s worth knowing that, in lease agreements, when there’s a point that areas and factors are calculated according to the Tegova norm, the tenant can terminate the agreement – he’ll also be right that he shouldn’t have any factors counted in. Both sides can obviously agree that floor and building common areas are included in the lease area. However, you shouldn’t mention in the agreement that it’s a factor counted according to the Tegova norm. Instead, you can write that it’s a norm modification, or (if it’s true) that the factor calculating method is coming from the BOMA norm.

Floor add-on factor (R/U Ratio)

In order to calculate the floor add-on factor (R/U Ratio) you need to “find” and measure the common spaces on the whole, single floor. According to BOMA such areas include: hallways (used by at least two tenants), common kitchens, cleaner’s rooms (if it’s used only by one level), multi-level distribution boards, smoking rooms (also multi-level ones, if there’s only one in the whole building and all tenants have access to it it’s included in the building add-on factor). Let’s reflect on a scenario when a floor has a total area of 2200m² (lease area and common floor area) and the common floor area itself has an area of 200m². Based on that the net lease area, the “carpet” one, is 2000m². The method of calculating the floor add-on factor is as follows: (2000m² + 200m²) / 2000m² = 1.1, or in other words 10%. Based on that, when someone on that particular floor (as floor add-on factors can vary between levels) leases an area of 500m², an additional 10% has to be added. He’ll then pay for 550m², plus the building add-on factor – spoken about in the second part of the article.

In the BOMA norm we calculate the floor add-on factor according to the formula:

Floor add-on factor (R/U Ratio) = floor sum (FSA + FAA + UA)/UA sum, where:

FSA – Floor Service Area

FAA – Floor Amenity Area

UA – Usable Area

Did you know that the floor add-on factor can, and often does, vary for different tenants on the same floor? For example, a part of a hallway is used only by two tenants, and the other four tenants on that floor don’t use the hallway at all. It’s one of many cases when the situation needs to be approached individually. If you have any inquiries about such cases, just send me the details to adrian.holub@geodezyjny.com . There are always many varieties in situations like this, you always need to describe and calculate the situation of the building, correct it according to the lease agreement. Why does it matter? As an example, a measuring team while performing the measurements assigns the purpose of rooms right away – you could think when encountering a small room “x” that it belongs to a cleaning person on that floor (there are some buckets, a mop and so on, and the room itself isn’t even locked). However, in the lease agreement, that room is a storeroom (lease area) of one of the tenants. The measuring team makes a mistake, so before printing out the whole measurement report we always send it in a digital form, in order to check if the measuring team correctly assigned the purpose of common floor and building spaces. As the example above shows, it’s not always clear, it’s often difficult to find the tenant’s outer lease area limits. It’s generally the only mistake that can be made by the measuring team, since the lease agreement (including the lease borders) is not given to us – that’s why you should always check when it comes to these issues.

The building add-on factor (R/O Ratio)

In order to calculate the building add-on factor (R/O Ratio) you need to “find” and calculate the common building areas in the whole building (from the minus levels to the highest storeys). According to the BOMA norm such spaces include: ground floor hallways in the entry hall, cleaner’s rooms (if there’s only one used by the whole building), building distribution boards, smoking rooms (but also only if there’s one used by the whole building), generally all building technical rooms, mother-and-child rooms, recently even spaces like

chillout rooms have been appearing. Let’s say the building has a total area of 20000m² (lease areas and common floor areas in the whole building), and the common building area is

1000m². The method of calculating the building add-on factor (R/O Ratio) is: (20000m² +

1000m²) / 20000m² = 1.05, or in other words 5%. Based on that, when someone leases an area of 500m² on that particular floor, 10% (floor add-on factor) needs to be added, which gives us

550m². You also need to add 5% because of the building add-on factor, so the tenant will pay for 577.5 m².

According to the BOMA norm the building add-on factor is calculated using the formula:

Building add-on factor (R/O Ratio) = PFA of the whole building / (OA + ALLOCATED AREA),

where:

PFA – Preliminary Floor Area

OA – Occupant Area

ALLOCATED AREA – the floor area belonging to the tenants

It’s also worth pointing out that: OA (Occupant Area) + Allocated Area = PFA

(Preliminary Floor Area)

Load Factor A

To calculate Load Factor A – the product of the floor and building add-on factor – you need to multiply 1.10 (floor add-on factor) and 1.05 (building add-on factor), which gives us

1.155. So 500m² (usable lease area) times 1,155 = 577.50 m², or counting in another way –

500m² times 1.10 = 550m², and then 550m² times 1.05 = 577,50m². In the BOMA norm we don’t include MVP (vertical technical and communication penetrations – staircases, shafts

(above 0,1m²), elevator shafts) when calculating the factors. We don’t include roads in underground parking lots or parking spaces either. Parking spaces are leased individually and are not included in any calculations. Storerooms on minus levels are not included in factor calculations either – their area is usually measured and leased at a different rate that the one paid for a m². Other norms (Tegova, GIF, RICS) specify what rooms are excluded from the description, but practice shows that there are no problems with using these rooms for calculating our “own” floor and building add-on factors. You need only remember that everything needs to be properly mentioned in the lease agreement.

A new trend – the complex add-on factor

A recently observed trend is introducing a third factor, known as the complex add-on factor, by investors and managers – it has to do with the area around the building. Profits from this factor are supposed to cover the costs of managing the lot (area) on which the building complex is located – for example office and retail buildings. It’s a large sum for the tenants, because the service charge for this factor is usually another 20 PLN for a m².

See also what records should be put in lease agreements about the add-on factor – read the article The lease agreement – examples of records about lease areas.

Copying the article or its parts without the author’s permission is forbidden.

Author: Adrian Hołub

Translation: Monika Hołub

Contact

 Monika Hołub

Co-owner Polish Geodetic Group

szkolenia@geodezyjny.com

Tel.: +48 785 041 07

 Adrian Hołub

Co-owner Polish Geodetic Group

adrian.holub@geodezyjny.com

Tel.: +48 608 577 042

Measure it soon!