International Property Measurement Standards

What do commercial real estate pros need to know?

Suppose you’re considering a purchase, such as a tablet, and decide to comparison-shop among several different manufacturers. However, when you do a little research, you find the specs for an item, such as storage capacity, are measured differently from one manufacturer to another. As a result, you’re comparing apples to oranges instead of apples to apples. You really don’t know how one tablet stacks up against another, even though they’re all the same type of device.

That’s the situation commercial real estate investors, brokers, leasing agents — and, in fact, anyone dealing with property — currently face and have faced throughout history. The way property assets, such as homes, offices, and shopping centers, are measured varies dramatically. For example, in some parts of the world, it is an established practice to include common space, such as elevator shafts and communal hallways, in floor area measurements; in other markets, off-site parking or even swimming pools might be included.

So many different methods of measurement in use makes it difficult for tenants, landlords, investors, and developers to accurately compare space. Research shows that a property’s floor area can deviate by as much as 24 percent depending on the method used, according to global property firm JLL.

Aside from the obvious confusion this can bring for tenants and buyers, there are some very significant and damaging implications for business and for wider economies that rely on consistent property data for financial reporting purposes. For example, the lack of consistency in property measurement data helps undermine achieving greater transparency through existing international standards such as International Valuation Standards and International Financial Reporting Standards. And for businesses and financial markets, the existing inconsistencies negatively affect financial reporting, which requires businesses to document their total assets, including property.

Implementing Change

The International Property Measurement Standards Coalition is an international group of more than 60 professional and not-for-profit organizations, including the Building Owners and Managers Association International, CoreNet Global, the Real Property Association of Canada, and the Institute of Real Estate Management, working together to develop and embed a single property measurement standard in the industry. The Royal Institution of Chartered Surveyors — an international organization that promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, property, and construction — was among the founding members of this coalition.

The International Property Measurement Standard will ensure that property assets are measured in a consistent way, creating a more transparent marketplace, greater public trust, stronger investor confidence, and increased market stability.

IPMS is a new, principles-based, international standard that sets out how to measure property assets. It means that for the first time, property will be measured in a consistent way around the world. IPMS does not define the units of measurement such as feet and meters, but instead it defines what is included in the measurement of property floor space. The first phase of IPMS, announced last November, applies only to office space. Future standards on measurement of other asset types are planned over the next few years.

IPMS in Action

IPMS will become established over time throughout the global marketplace as property users come to understand the benefits of using a common method for measuring property assets. In some markets, it is probable that existing standards will remain in place and may at first be complemented by IPMS; however, IPMS will always be secondary to any legally mandated requirements. Where possible, the coalition will undertake to work with governments to review and update laws to reflect IPMS. In addition, the new standard will operate alongside and enhance existing international standards such as IVS and IFRS. An international standard for measuring property was virtually inevitable in an increasingly global real estate sector.

IPMS will not directly affect transactions in the United States or elsewhere, because the sale or transacted price is not determined by measurement but rather by market forces such as demand and scarcity. The fact that a measurement of an office building may change when measured in accordance with IPMS does not change the price that an asset or liability should exchange on the valuation date between a willing buyer and a willing seller.

However, the new standard could indirectly affect transactions. For example, if IPMS doubles the quoted size of a property then the price per square foot would be cut in half as a result. And if IPMS halved the size of a property, then the price psf would double to reflect this change.

The industry largely understands the case for an international standard and is prepared to be involved in this process. Most measurements have already been taken, and a free web conversion tool will be provided later this year to convert IPMS into other major standards, to allow for dual reporting in the near term. The market sees the potential in IPMS, and participants will be asking their clients to adopt it. RICS and other members of the IPMSC are helping the real estate industry get ready to deliver IPMS as the market demands it.

Helping International Investors

IPMS will benefit international real estate investors in a number of ways, including:

  • providing a mechanism for benchmarking property measurement information across international markets;
  • offering a common and transportable method for property practitioners to use;
  • enabling international tenants, investors, and owners to benchmark their property assets without needing to spend significant sums of money and resources calibrating space measurements;
  • providing greater transparency and consistency to all property users, wherever they are located; and
  • offering consistency in the data that accompanies valuations and financial reporting, thereby assisting property and facilities managers in comparing and utilizing space.

In summary, IPMS will provide greater confidence and consistency in property measurement for investors.

Investor communities will play an enormous role in the success of IPMS, as will other stakeholders such as banks, property advisers, and other external stakeholders. More than 120 organizations so far have registered to support the IPMS initiative as partners, and have signed declarations to help the implementation of IPMS in their businesses and markets. Specifically, partners agree in principle to adopt IPMS measurements by either using them or requesting them within their work. Among the early partners are major corporate tenants such as Vodafone and the International Monetary Fund, as well as leading property consultancies including JLL Middle East and CBRE Middle East. The Dubai government has become the first national government to formally endorse IPMS and Jamaica’s National Land Agency recently also endorsed the initiative, with other governments beginning to follow their lead.

As for next steps, the IPMS Standards Setting Committee is now working on subsequent international property measurement standards and is hoping to publish IPMS for residential buildings later this year. In due course, the committee will also publish IPMS for industrial, retail, and mixed use. This should bring greater confidence and uniformity to property measurements in these markets as well.

Neil Shah is managing director of RICS Americas, covering the U.S., Canada, Latin America, and the Caribbean. Contact him at

The International Property Measurements Standard for Office Buildings was published in November 2014. Download your copy at

Neil Shah

About RICSThe Royal Institution of Chartered Surveyors promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, property, and construction. RICS accredits 118,000 professionals and any individual or firm registered with RICS is subject to its quality assurance. Member expertise covers valuation and management across all asset classes as well as construction, infrastructure development, and the management of natural resources, such as mining, farms, and land. In the Americas, RICS has staff in New York; Washington, D.C.; Los Angeles; Toronto; São Paulo, Brazil; and Barbados.


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