PURPOSE:

  • The purpose of these standards is to ensure the highest degree of comparability of data across real estate markets.
  • When each office uses the same criteria and methodology our market reports become more reliable and much easier to interpret.
  • This is not an exhaustive list of real estate definitions!  The intent of this document is to focus on a handful of important definitions that researchers can use so that our local and national reports are both reliable and consistent across markets.  For a full list of NAIOP real estate definitions please visit the NAIOP site.

 

VACANCY, AVAILABILITY:

  • All North American markets are required to report vacancy statistics (vacancy rate is mandatory, vacant square feet is optional) in their quarterly reports.
    • Definition: “Vacancy” is defined as space that is not physically occupied by a tenant. Some markets expand this definition to also include space expected to be vacated within six months. * Keep in mind that if you report vacant space that is expected to be vacated within six months you also need to include that space in your absorption calculations.
  • Offices must track Availability for the purpose of calculating weighted average asking rents. However, reporting availability rates and square feet in the statistical page of a local  market report is optional.
    • Definition: “Availability” is defined as existing space or space that is to be delivered within six months that is currently being marketed as available for lease or sale in a given time period. It includes space that is available regardless of whether the space is vacant, occupied, available for sublease, or available at a future date.  

 

NEW CONSTRUCTION vs. EXISTING:

  • The status of a property changes from “New Construction” to “Existing” as soon as the property receives its Certificate of Occupancy.

 

INVENTORY CRITERIA:

OFFICE

What to Include:

What to Exclude:

  • Include all single and multi-tenanted buildings.
  • Include all competitive owner-occupied office buildings.
  • Exclude any office buildings that were built with the intent to house only medical users.
  • Exclude all properties where the government is both 100% owner and occupier.

 

INDUSTRIAL

What to include:

What to Exclude:

  • Include all single and multi-tenanted buildings
  • Include all owner-occupied industrial buildings
  • Include flex space
  • The industrial stats base should exclude heavy manufacturing properties. These are properties with specialized manufacturing uses that could not be easily re-leased to a new user.

 

NET ABSORPTION:

  • Definition: “Net absorption” is the change in occupied space, from one period to the next, where the date of change is the date the space is physically occupied or physically vacated. 
  • Absorption must be consistent with change in vacancy and/or change in inventory/construction.

 

CHANGES/UPDATES TO INVENTORY:

  • Changes in inventory due to new construction and renovation are to be added in the quarter of delivery.
  • However, material revisions (i.e. inadvertently omitted buildings, incorrect building sizes) to your inventory should be made only in Q1 of each year
  • Anytime you update your inventory (missed buildings, etc.), you must also update all previous inventories, vacancies, absorptions and space weighted rents so that historical data is consistent with the update.

 

BUILDING THRESHOLD:

  • Office:  The standard is to track all office buildings with 10,000+ square feet. Below are the exceptions to this rule:
    Exceptions:
    • In the largest markets the minimum threshold can be increased to 25,000 square feet.
    • Chicago uses a minimum of 20,000 square feet
    • New York and Los Angeles use a minimum of 25,000 square feet
    • Smaller markets have the option to track buildings less than 10,000 square feet if the market dynamics are such that tracking this inventory is important.
    • Markets must request approval for the above exemptions from US Research Director and Chief Economist.
  • Industrial: 
    • All buildings 10,000 square feet and larger should be tracked. 
    • Smaller markets have the option to track buildings under 10,000 square feet.

 

 

RENTS:

  • For individual market reports:
    • Sublease rents should be excluded from the calculation of Weighted Average Asking Rent
    • The Colliers standard is to weight rents by Available square feet. When weighting by availability, available includes all competitive space (not to include any developments under construction). In the event that your office does not track Available square feet, rents should be weighted by Vacant square feet. Total inventory should not be used to weight rents.
    • The statistics table in each market report also needs to report Direct Asking rents weighted by Available or, as appropriate, vacant square feet
    • US weighted average asking rents should be reported on a gross basis in US dollars
    • Canadian weighted average asking rents should be reported on a net basis in Canadian dollars.
  • For the North American reports all office rents are reported on a gross basis. Industrial rents are to be reported on a net basis.
  • So that office rents are consistent across North America, Canadian offices need to also collect operational expenses and taxes so that these can be added to reported net rent to calculate gross rent.