In a market where commercial real estate rental revenue is stretched thin, landlords are increasingly turning to an old trick to add value – making their properties bigger.

More local commercial property owners are re-measuring their buildings, which usually results in properties containing more square feet. While this may seem like standard practice, the new measurements also serve to increase the size of a space on paper, even though the building itself has not grown.

That swelling of rentable space can translate into sizable revenue for property owners, and in turn raise rents for tenants. The practice can be lucrative, and can also occasionally cause tenant representatives and landlords to butt heads.

One tenant representative, that did not want to talk on the record out of respect to his client, told Banker & Tradesman that a recent client looking to renew a lease found out its existing space had increased by 2,000 square feet after being re-measured. If that tenant was paying $50 a foot, that’s an increase of $100,000.

Determining A ‘Gallon’

Several reasons exist for re-measuring. Many times it is to ensure that a prospective buyer is getting the square footage they’re told a space contains when purchasing a building – especially since different owners use different, outdated or modified versions of the industry’s measurement standards.

Many office space owners measure their buildings using standards set by the Building Owners and Managers Association. Those standards are updated every five to 10 years, said Andrew Maher, managing director of leasing for Equity Office, which owns an 11.7 million-square-foot portfolio in and around Boston.

Standards change, and measurements differ from owner to owner, so Maher said Equity measures its spaces every time it leases to tenants or buys new property.

“It’s harder from a landlords’ perspective when a current tenant’s lease is coming up, and you tell them the measurements have [increased] to the new standard,” Maher told Banker & Tradesman. “Imagine you’re leasing a space and all of a sudden [the landlord] tells you it’s bigger than it was the year before, but nothing’s actually changed.”

Landlords may not see a problem with variations on measuring methods, but tenant reps consider those differences arbitrary, and say there is no end to what property owners will do when re-measuring a space.

“There’s no law that says you have to use [those standards],” said David Richardson, executive vice president for Boston tenant representation firm McCall & Almy. “It’s whatever you can get away with. Some tenants just don’t focus on it. When you go buy a gallon of milk, the milk comes in a gallon container, and there’s probably some law or governmental agency that says… [you have to get] the number of fluid ounces that are included in a gallon,” but in real estate, that’s not necessarily the case.

Richardson called the standards property owners use a “rubber ruler.” He said he advises clients that the first thing to do when shopping for office space is to hire an architect to sit with blueprints and measure the space.

“See how many square feet you can actually put a desk on,” he advised.

Buyer Beware

That “plannable” or “carpetable” square footage can be markedly different from the rentable square footage a landlord wants to charge tenants. For the tenant, it’s very much a buyer beware environment.

“[Landlords] have the perfect right to do it, but the tenants also have the perfect right to say they’re going to pay 10 percent less rent,” said Chuck O’Connor, a partner at Boston commercial real estate advisory firm FHO Partners.

A tenants’ only recourse is to do their homework by measuring usable square footage and determining what their needs are, and negotiating from there. Especially now, O’Connor said, when almost every lease proposal FHO considers contains different dimensions than five years ago.

“Just about every landlord in the city of Boston has [re-measured their space], and most have done it more than once,” O’Connor said. “When rents were growing in the mid 1980s and 90s, it wasn’t as much of an issue because landlords were happy with their returns. But when the market gets stagnant, you scratch your head and say, ‘How do we get back in the hunt here?’ And part of that is expanding the building.”

“All you can do is make sure your client … lays [comparable spaces] out and does an apples to apples comparison in each building [where they look to rent],” he added. “The measurement differences can be up to 15 percent.”

Equity’s Maher maintains that when his company re-measures buildings and individual floor plates, the results are in no way arbitrary, and the company takes very seriously the implications of increased square footage.

Most sophisticated tenants do their homework, and in the end, square footage is only one variable in the negotiations between landlords and tenants, Maher said.