The Building Owners and Managers Association
) International, in collaboration with research firm Kingsley Associates, has released the 2012 Experience Exchange Report
). The report showed a 2.5% increase in private sector base rent income, which could indicate a more sustained market recovery
Despite increases in operating and fixed expenses, with standard operating expenses up 1.3% in 2011 and operating plus fixed expenses up 4.2% in 2011, the private sector saw modest increases in rental and total income of 2.7% and 1.7%, respectively. This is encouraging news after last year’s income numbers dipped.
The EER findings also indicate that the number of square feet per office worker decreased 2.9% last year, from 315 square feet per person in 2010 to 306 square feet per person in 2011. This data is consistent with other industry trends showing office space per worker
is decreasing as organizations turn to more mobile work
options and open office floor plans
“As the commercial real estate
market makes its way back to normalcy, building owners and managers are beginning to see income levels improving,” commented BOMA International Chair Boyd R. Zoccola
, executive vice president, Hokanson Companies Inc. “The market is recovering but still tenuous. The EER numbers also indicate that property professionals continue to operate their buildings as efficiently as possible, making strong asset management
more critical than ever.”
Private-Sector Office Building Income Trends
- Private buildings in the U.S. saw a 2.5% increase in base rent from $21.61 per square foot (psf) in 2010 to $22.15 psf in 2011.
- The average building’s rent abatements increased 14%, from $1.07 psf in 2010 to $1.22 psf in 2011.
Private-Sector Office Building Expense Trends
- Amortized tenant improvement costs in private buildings saw a 10% increase, from $2.09 psf in 2010 to $2.30 psf in 2011, possibly indicating tenants moving into new space or current tenants improving existing space.
- Repair and maintenance costs saw a 2.7% increase, from $1.87 psf in 2010 to $1.92 psf in 2011.
- Utility costs declined for the third consecutive year as BOMA members continued to refine their asset management skills and eliminate unnecessary cost. Utilities decreased 2.5%, from $2.38 psf in 2010 to $2.32 psf in 2011.
The EER is commercial real estate’s premier income and expense data benchmarking
tool. It provides valuable insights into the performance of more than 5,400 buildings, in 250 distinct markets, across 125 cities in the United States and Canada. The EER allows users to conduct multi-year analysis of single markets and analysis of special use facilities such as medical office buildings, financial buildings, agency managed, corporate facilities, and all-electric buildings.