Under commercial tenancy law, different optional methods are used to determine the area to be leased (see “Area Calculation Methods”). The calculation basis for determining floor area may vary depending on the location and the landlord. For example, currently about 85% of all office space in Munich is leased on a GFA basis.

To put it simply, the total floor area is measured from facade to facade to determine GFA. This way, construction areas, stairwells and shafts are included in the calculation.

Because this method of calculation gives us a larger area, rent per square meter is lower than that for the net floor area of the same space. In order to be able to compare rental cost, offers need to be considered on the basis of a uniform space definition.

• Consulting and Sales and Leasing Mandates for properties:

Here the landlord commissions a Real Estate Broker or Consultancy Company (in exceptional cases, several) to coordinate sales and leasing activities for their property. This agreement also governs cooperation with other external consultants or agents. If a prospective tenant has selected and commissioned their own consultant, then that consultant can also access these properties for their client in cooperation with the agent responsible for the property. In such cases, both parties are advised by their respective representatives. This has been common practice for many years on Anglo-Saxon markets.

• Consulting mandates for clients:

In this case, the consultant represents the tenant’s interests. Tenants mandate their consultants or agents to give them access to all options available on the market. The comprehensive spectrum of services to be provided to the client is specified in a written instruction for consulting services (scouting out the market, comparing options, assisting in contract negotiations in regards to financial terms, preparing development plans, comparing property data and making recommendations). The consultant is the sole representative of the tenant for the period of the mandate.

The different area calculation methods are summarized under DIN 277. This norm draws a distinction between gross floor area (GFA), net building area (NBA) and areas that are leased in accordance with gif, an area definition specified by Gesellschaft für Immobilienforschung (German Association for Real Estate Research). These methods differ in the type of measurement, in the approach used and by which areas are measured. Approximate criteria are as follows:

GFA – all surfaces are measured from the shell on one side of a building to the shell on the opposite side, including shafts and structural columns or walls.

NBA – all construction areas are eliminated from the GFA

gif – roughly equivalent to NFA

Please note: With the 2016 amendment, the term “net floor area (NFA)” was changed to “net building area (NBA)” and “usage area (UA)” was changed to “useable area (UA)”.

Depiction of space calculation pursuant to DIN 277-1: 2016-01

There is currently no consensus regarding a single standard governing energy certification for office buildings. The increasing use of the three leading standards – LEED (Leadership in Energy and Environment Design), BREEAM (Building Research Establishment Environmental Assessment Method) and DGNB, Deutsche Gesellschaft für Nachhaltiges Bauen (German sustainable building council) – shows the growing importance of certification in Europe. There are large differences among the individual countries.

Some countries such as Belgium, Germany, France, Italy and the Czech Republic are developing their own national standards for energy certification, while other countries such as the Netherlands and Poland are using international standards and customizing them to their national needs. The first office building to be awarded LEED Gold was the new office building of the Süddeutsche Verlag publishing house in Munich in 2010.

Harmonizing these standards would be advantageous to the entire European Real Estate business. An increasing number of new buildings is being energy certified. New buildings only make up a small percentage of the existing total housing stock. Therefore, the emerging practice of post-certifying existing buildings contributes to a positive development.

The current leading standards are:

More information on LEED at: www.usgbc.org

More information on BREEAM at: www.breeam.org

More information on DGNB at: www.dgnb.de

The standard reference book ‘Handbuch der Mietnebenkosten’ (manual on additional expenses for rental properties) provides a comprehensive overview of all issues pertaining to additional expenses for tenancies in residential and commercial properties. This manual provides the reader with basics such as utility cost agreements, calculation standards and invoicing. Different additional expenses from wastewater to central heating are discussed in detail with reference to a broad range of case law.

References to general tenancy law, such as how to handle additional expenses upon reduction or termination, and procedural issues complete the picture. The German Federal Court has made many landmark decisions on the law regarding additional rental expenses since the previous edition of this book. The new edition takes account of this extensive additional case law and discusses the consequences.

The book was published in its 14th edition by Luchterhand Verlag and has 534 pages.

The author: Dr. Michael J. Schmid, Munich, formerly a judge at the High Administrative Court of Bavaria, is one of the primary experts in the area of law regarding additional expenses for rental property.

The International Property Measurement Standards (IPMS) will provide more transparency and consistency in the Real Estate markets around the world and is the result of a global initiative to develop a uniform method for calculating property area. It is expected to eventually replace a number of existing standards that are currently in use around the globe. This would make it possible to directly compare Real Estate data on property area worldwide for the first time. RICS (Royal Institution of Chartered Surveyors)* is a founding member of the initiative that developed the IPMS. A total of 55 professional organizations were involved. Their participation ensures that the new standard, which is to be used by industry participants and organizations around the world, specifies a single, unified standard. The IPMS were developed because different calculation methods are used to measure property area around the world, leading to uncertainty. For example, connected parking spaces are sometimes calculated as office space in India and recreational facilities could be included in Spain. ‘Theoretical’ floors may even be included in some regions of the Middle East, while in other regions only air-conditioned areas may be calculated, with the actual area being irrelevant. Depending on the measurement standard used, a calculation of the area of the same building can vary by up to 24 percent.**

* The Royal Institution of Chartered Surveyors (RICS) is a British professional association of real estate professionals and real estate experts
** Based on research by global real estate service provider Jones Lang LaSalle (JLL)

More about IPMS:

• The IPMS for office properties are available at www.ipmsc.org
• The IPMS Coalition was established during a meeting at the World Bank from
  May 1, 2013 – May 2, 2013.
• The IPMS for office property are the first of a series of international area calculation standards, including the IPMS for residential real estate, IPMS for industrial real estate and the IPMS retail property.
• All organizations involved in the initiative have undertaken to include the new standards in their respective guidelines for industry professionals.
• RICS Chartered Surveyors will use the IPMS area calculation when working for their clients on markets worldwide.

Because of the current supply and demand situation, the landlord or property developer often pays the broker or consultant fee on the commercial rental markets in the major German cities.

This fee is part of the landlord’s marketing budget. It can vary depending on location or submarket.

Currently, marketing budgets for new leases or lease renewals in Munich typically set aside 3 months net rent plus VAT.