Office Buildings Will Have A Rating On Their Quality
2 February 2016 – Cinco Días
The real estate sector gets ready for a big novelty. Similarly to the debt rating of companies and countries, the office buildings will have a rating to ensure constructive and technical quality to potential investors.
The seal is called Office buildings technical rating. It is driven by the Spanish Association Offices (AEO, in its Spanish acronym), where large landowners, intermediaries and investors are integrated, and it will be voluntary. Although in this entity they believe it will be imposed thanks to the driving companies and because it will become the only guarantee of reference for the real estate market.
The aim of the AEO is to provide all stakeholders an objective and only measure of the quality of buildings. This optional rating system will be approved in two months, as final details are currently being closed. “We are finishing a standard for the technical rating of office buildings, which will be voluntary and will serve to increase confidence and transparency in the Spanish market from the perspective of investment, rental or portfolio analysis” José María Álvarez, AEO Chairman explains.
The first consequence will be knowing the condition of the buildings. Given it is a voluntary act, it is likely that the newest and highest quality buildings will promptly submit to be eligible for this qualification. This organization states that there are 30 million square meters of office space in Spain, with a value of EUR 65,000 million in assets, which generate about 4,300 million in income from leases.
The AEO is composed of more than 60 companies. Among them, large listed companies as BBVA, Iberdrola, Indra, Repsol and Telefonica, which in turn are usually owners of major buildings where their headquarters are installed. Property management companies as Torre Rioja (Angel Soria), Colonial and Pontegadea – family office of Inditex founder Amancio Ortega, also participate.
Listed real estate investment companies as Merlin Properties (of Ibex 35) and Lar España are also partners, as well as intermediaries including JLL, Knight Frank, Savills, CBRE, Cushman & Wakefield or BNP Paribas Real Estate. Mutua Madrileña and Mapfre insurance companies are also members.
The objective of this real estate agents group is to give transparency to the sector. Thanks to this seal, an international fund or a company will know what they face when acquiring a property. There will even be investors that will be suspicious of the buildings which do not have the rating. “It will contribute to transparency in the decision-making process,” says Alvarez on how companies will welcome this rating system.
“It will contribute to transparency in decision making,” the AEO states.
With some final details to be confirmed, the rating will have five sections. Outstanding, for those excellent, will be A+ rating. From there, going down, ratings will be A, B+, B y C.
This certificate will be awarded by AEO in order to have a character of neutrality, but different companies and engineering companies will be responsible for the technical work, opening a new market of professional services for rating companies. Once these consultants rate the offices, the association will review the report and confirm the rating. “The AEO will review and audit all assessments by carried out by external companies,” Alvarez confirms. In addition, the certification will be renewed after a given period to assess for deterioration. This revalidation will take place every three or four years, a term not defined yet.
The concepts considered for the report focus on the architecture and facilities of the buildings Evaluators will consider distribution plants and clearances, common areas, exterior envelope and energy facilities, climate system or control. The unique provisions, seniority and energy and sustainability certifications will also be taken into account. Neither location nor aesthetics will be considered.
This association is of the opinion that this audit will also be useful for an owner to know what works and measures they must take, in addition to how much it can cost in order to improve the rating of their property.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Aura Ree