The smoke & mirrors landlords use in measuring the space you lease

All is not what it seems to prospective tenants signing an agreement to lease space of a certain size and measurement in a commercial building.

There are a few tricks that some unscrupulous landlords play when it comes to measuring the space you lease, and if it is to their advantage – which it most often is – they can resort to pulling the wool over your eyes.

And before I start getting hate mail, I do emphasise SOME unscrupulous landlords, not all.

The trick can work two ways. The first is a space that, for example, is said to be 250 square metres. However, what the landlord or their agent might not tell you is that you are in fact getting perhaps 220 square metres, and the rest of the space is made up of a common area and toilets on the shared floor of a building.

This can be a real headache for tenants, as not only are you in effect paying more for the actual useable space than you had bargained for, you may end up with problems fitting your operation into the smaller premises.

This can be a critical issue when you have to allow a specified amount of space per employee, or have a specific minimum space requirement to operate equipment.

The second trick works in the opposite way. You can for example be let a space for 250 square metres that is then re-measured and found to be a larger area. The landlord then turns around and asks you to pay more.

I have come across tenants who have been caught by this trick and have ended up liable for thousands of dollars more in annual rental, plus increased operating expenses costs.

One has to be very careful to keep an eye on the measurement system being used by the landlord as well. There is a standard set by the Property Council of NZ and the Property Institute of NZ. Some building owners may try to trick tenants by claiming they are using some “modified version” of the PCNZ/PINZ standard.

It is always worth checking the measurement system being used, or asking for the premises to be measured by a registered surveyor using the standard method.

Unless specific clauses have been negotiated in a lease, there is little you can do about these tricks once you have signed up.

Negotiations over space and the issues that come up around such negotiations has been core business for me in most of my career in property leasing.

Time and again I have come across tenants who have been caught out over disagreements about how much space they are leasing in reality.

The thing is that landlords can do really well out of these ruses. I have known landlords that have re-measured the whole building so they can add on rental. This way the value of a multi-level building can be increased by millions of dollars, so there is a lot at stake.

Watch out for the potential smoke & mirrors that can be used to trick you into thinking a space is bigger or smaller than you think.