Readers of our book, Negotiating Commercial Leases & Renewals FOR DUMMIES, will learn (in part) that space measurement is one of our favorite topics. When an area isn’t measured correctly, a doctor can end up with phantom space, or space that really isn’t there – even though you’re being charged rent for it. We find it absolutely shocking how much space is incorrectly measured. The discrepancies may not always seem like a lot, but why should any physician tenant overpay on rent needlessly?
First of all, at least half of the space or measurement discrepancies we uncover are accidental, perhaps negligent, but certainly not fraudulent. Phantom space can easily occur. Consider three side-by-side commercial units measuring 1,400 square feet each and totaling 4,200 square feet. The landlord decides to change the units to a 1,300 square foot unit and a 2,900 square foot unit and hires a contractor to put up a demising wall between them. If that wall is built slightly off line or is crooked, that can easily affect the area in each of the units; one might have a little more space while the other will have phantom space.
Phantom space or measurement discrepancies are more likely to occur when the space is irregularly shaped (such as if a room is partially round). The lease line can also affect your space. This is the point in the property from which your rentable space is measured. Depending on your type of building, some lease lines may be calculated to various points such as the outside of the interior wall that faces a hallway, to the exterior wall surface, to the midpoints of the demising wall shared by two tenants, or even to the edge of the overhang on a building. If the person measuring the premises is unaware of the measurement standard and lease lines, they can make measurement mistakes or over-measure your commercial space – mistaking where the lease line should really be.
If you discover that your area has been mis-measured or miscalculated, you need to take action. Although many landlords may agree to correct an obvious measurement discrepancy for the future, they can be resistant about paying the tenant back for past years of rent overcharges. In the event a space measurement discrepancy is found partway through a lease term where the landlord is resisting a refund, the doctor tenant has a couple of options:
Factor the recovery in as part of the lease-renewal negotiation. This only benefits the doctor tenant planning to stay in the property with the lease expiring soon.
Take legal action or explore arbitration: This can be an expensive path for the tenant and, depending on the wording of your lease agreement and the size of the potential recovery, may not necessarily be the best route for you to take.
The bottom line here is this: no landlord should be collecting more rent than they are entitled to just because the property wasn’t measured properly. Have your measurements checked to ensure that you’re not paying for phantom space.
For a copy of our free CD, Leasing Do’s & Don’ts for Commercial Tenants, please e-mail your request to DaleWillerton@TheLeaseCoach.com.
Dale Willerton and Jeff Grandfield – The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com.