Size matters!

As you can imagine, a business wishing to buy or lease commercial property needs to know exactly what they are getting for their money. Surveyors have to measure the property in order to value it, and then make sure the solicitors writing the lease define exactly what’s included.

Many ways to measure
The measuring process is standardised according to the RICS Code of Measuring Practice (5th edition). This code is not mandatory, but provides quality assurance with succinct and precise definitions on a common and consistent basis. It is often quoted in lease documentation.

Supermarket case study
Safeway planned to lease a premises in Fleet Street to use as a city centre supermarket. The developer was to provide a basic shell with a minimum Net Internal Area (NIA) of 1852.7 sq. m. on a 25-year lease.

However, when Morrisons took over Safeway, the premises didn’t fit with their strategy so they looked for a way out of the deal.

The code defines NIA as ‘usable area’, and Morrisons believed that the NIA provided was not equally usable, as the developer had included areas such as lifts, delivery area/fire escape, ramp and stepped plinths in the NIA – not just the floor space.

In Court, the judge ruled that some of these areas were included in the NIA, while others were not. However, the newly measured total was over the minimum in the agreement and Morrisons lost their claim.

Lessons learned

• NIA can be broken into areas of different value
• Both parties must define what is included in ‘usable area’
• Measuring is critical (and surveyors can help!)

*The case Kilmartin SCI (Hulton House) Ltd v Safeway Stores  [2006] EWHC 60 (Ch)

This is part of a regular series of topical articles provided exclusively by RDN Surveyors. If you would like any further information or add your own comments please reply to this e mail or contact Roger Nelson on 0800 902 0466