Phantom space has nothing to do with a building being haunted. But it is scary to think of the money you could be throwing away if it exists in your company’s lease.
To understand what this means you first need to understand how your landlord determines the square footage of your leased space. “Usable space” is the space actually contained within your walls. “Rentable space” is the usable space plus your proportionate share of all common building areas. The American National Standards Industry (ANSI) has created detailed specifications on how to create accurate measurements. Some standards have been adopted by The Building Owners and Managers Association (BOMA). Some landlords agree to adopt these standards. Some don’t.
Phantom space occurs when either the usable or rentable square footage numbers or both are inflated.
This can happen because the Landlord or their representatives choose to ignore the ANSI/BOMA standards in favor of their own. Calculations may be based on a measurement of the landlord’s choosing. This can be anything that the landlord decides and may or may not be based on a real metric. Illegal? No. All aspects of a lease are negotiable, including the basis for measurement. The landlords that do this almost certainly have attorneys who include
language in the lease that will indemnify them and prevent recalculation once the lease is signed.
Take these precautions to protect yourself:
• Insist that measurements and rentable adjustments be done in accordance with ANSI/BOMA standards.
• Hire your own architect. Architects have a fiduciary responsibility to their clients.
• Include language in the lease document that affirms measurement to ANSI standards and allows for adjustment if a discrepancy is discovered.
• Be certain that you have a tenant representative that insists on the items above, manages the transaction accordingly, and will not passively accept the non-conforming measurements of unscrupulous landlords.
Contact Ryan Hartsell with questions or assistance to purchase or lease commercial real estate in and around the Houston, Texas area.
