Sep
25

Office Operating Income, Costs Relatively Unchanged: IREM Report

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September 25, 2008

By: Adam Perrotta – Commercial Property News

Total collections for suburban office complexes nationwide in 2007 dipped less than 1 percent from 2006 levels to $19.31 per square foot of net rentable area, whereas those for downtown properties increased 3.1 percent to $19.85 per square foot. Total actual collections for downtown properties were 2.8 percent more last year than their suburban counterparts, according to the 2008 edition of the Income/Expense Analysis: Office Buildings, a new benchmarking study published by the Institute of Real Estate Management (IREM).

The annual report analyzed operating income and costs for 1,549 private-sector office complexes–some containing multiple buildings–in major metropolitan areas and regions in the United States.

Total operating costs for suburban buildings in 2007 rose just 2.1 percent from the prior year to $8.47 per square foot, while operating costs for downtown properties increased 6.6 percent to $9.43 per square foot of rentable area.

Nationally, net operating costs for suburban buildings increased a slight 2.8 percent to $6.19 per square foot in 2007 vs. 2006, whereas those for downtown properties increased 3.9 percent to $6.90 per square foot.

All major expense categories for suburban properties rose last year except for janitorial/maintenance costs, which remained the same. Insurance costs saw the largest increase, 7.7 percent, followed by real estate and other taxes, up 4.7 percent, utility costs up 3.1 percent, and administration/benefits costs up a slight 0.9 percent.

Similarly, all major expense categories for downtown properties increased except for insurance costs, which remained the same. Utility costs increased 3.4 percent in 2007 vs. 2006, janitorial/maintenance costs increased 2.8 percent, and administrative/benefits costs increased 1.8 percent.

ARTICLE SHORTENED DUE TO LENGTH….

LINK TO ARTICLE HERE:

http://www.commercialpropertynews.com/cpn/content_display/property-types/office/e3i145a1d5cabedb4a1ddbf87d69678390f
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