Washington, DC (PRWEB) October 12, 2011
Utilities and fixed expenses in commercial buildings decreased significantly in 2010, indicating that property professionals are focused on controlling utility costs and property taxes. Buildings saved $0.11 per square foot (psf), or 4.3 percent, in utilities expenses from 2009 to 2010. Fixed expenses, which are overwhelmingly comprised of real estate taxes, fell $0.40 psf in 2010, a decrease of 8.8 percent. The decrease in fixed expenses may reflect successful tax appraisal appeals by property owners and managers. The data was recently published in the Fall 2011 BOMA/Kingsley Report, a collaboration between the Building Owners and Managers Association (BOMA) International and Kingsley Associates.
Other key trends identified in the report include:
- During 2010, owners and operators of private-sector office buildings in the U.S. spent $0.07 more psf than in 2009, an increase of approximately one percent. The largest increase in percentage terms occurred in the repairs/maintenance category, where expenses increased an average of $0.07 psf, or 4.1 percent.
- Utility costs were, on average, 6.2 percent higher at buildings in downtown locations for 2010 when compared to all U.S. private sector buildings. Conversely, suburban buildings experienced utility costs 8.4 percent below this average. But both downtown and suburban buildings achieved decreases over last year’s utility expenses, with a 4.2 percent decrease for downtown buildings and a 5.9 percent decrease for suburban.
- Government buildings outdid their private sector counterparts in utility savings with a 7.7 percent decrease, compared to 4.6 percent for U.S. private sector buildings.
- Buildings in downtown locations saw a substantial decrease in fixed expenses (down 9.6 percent, by implication, through relatively steep valuation adjustments), but still reported expenses 18.0 percent above the U.S. private sector average. Fixed costs at suburban buildings decreased only 6.8 percent, but remain 23.1 percent below average.
- Utility costs in the District of Columbia proper – already 54.8 percent above the national average – increased 8.3 percent, while in the Virginia suburbs they fell 10.3 percent and were 7.6 percent below the national average.
- Miami and Philadelphia are both notable for the magnitude of the utility expense decreases they experienced (14.4 percent and 16.8 percent, respectively).
- Atlanta and Philadelphia were among the markets with the lowest fixed costs in 2010 (31.3 percent and 31.5 percent below the national average, respectively). Boston and New York had relatively high fixed costs (85.8 percent and 124.9 percent above average, respectively).
“These findings demonstrate that despite a difficult commercial real estate market, the industry is finding innovative ways to decrease expenses and enhance asset values,” remarked BOMA International Chair Boyd R. Zoccola, executive vice president, Hokanson Companies Inc. “In-depth analysis of this kind helps property professionals contextualize their own buildings’ income and expense data and track their performance against the market.”
The BOMA/Kingsley Report includes in-depth analysis of the latest income and expense data for commercial office buildings. Market-level trends for several cities—Atlanta, San Francisco, New York and Washington, D.C.—is also included, as well as articles focusing on the impact of increased density on office operations and how technology is affecting the next generation of benchmarking.
The report was based on data from the Experience Exchange Report (EER)®, the industry gold standard for benchmarking income and expense data in commercial offices, providing valuable analytic insight into the performance and efficiency of individual buildings compared to other individual buildings and markets in the U.S. and Canada. The 2011 EER database includes more than 6,500 buildings from 278 different markets and more than 140 cities.
The BOMA-Kingsley Report results were based on analysis of a control sample of buildings in the U.S., for which data was submitted in both 2010 and 2011, with minimal changes in total rentable area and occupancy. The main analysis examines trends based on building type, location, market, expense categories and more. This year's same-building data set includes 1,790 buildings and represents nearly 375 million square feet.
Read the full BOMA-Kingsley Report and learn more about the Experience Exchange Report.