BOMA International Research Finds Office Building Net Income, Security Spending Increased in 2004

The US office market reported a five percent increase in net operating income (NOI) and a decrease of 6.1 percent in total expenses in 2004, according to data collected and reported in the Building Owners and Managers Association (BOMA) International’s 2005 Experience Exchange Report (EER). The data was made available for the first time June 26 at BOMA’s North American Commercial Real Estate Congress and The Office Building Show in Anaheim, California.

Thanks to a stronger economy and the creation of new jobs in 2004, building occupancy increased slightly compared to the previous year with 88.7 percent in 2004 vs. 88.54 percent in 2003. Even though total income remained constant at $23.89 in 2004, NOI increased by 5 percent ($14.15 vs. $13.51) in 2003. This was accomplished in part because total operating expenses decreased by 3 percent ($6.32 vs. $6.52) and administrative costs declined 1 percent ($1.22/rsf vs. $1.23/rsf) in 2003.

Security remains a major concern for commercial building management, with an increase of 2 percent in security expenses ($.56 vs. $.55) from the previous year. Building insurance costs decreased slightly to $.37 per square foot of the building in comparison with $.40 in 2003. However, they remain higher than 2002, when the amount spent on insurance was $.33 per square foot of a building.

Expenses for utilities showed an increase of 1 percent in 2004 ($1.83 rsf vs. $1.82 rsf in 2003). Cleaning expenses in 2004 also increased marginally by 1 percent, with the industry reporting $1.20 rsf on cleaning costs in 2004 vs. $1.19 in 2003. However, roads/grounds is one category where expenses showed a significant decline in comparison with 2003 as well as prior years. The industry reported expenditures of $.17 rsf on roads/grounds vs. $.21 in the same category in 2003.

Some city highlights from the 2005 EER include:

Highest Total Income/RSF

Lowest Total Income/RSF             

Highest Total Expenses/RSF

Highest Real Estate Taxes/RSF

The survey results for calendar year 2004 are the weighted average responses of 3,210 buildings, representing approximately 700 million square feet of space.

For over 80 years, BOMA's annual EER has been the source for building performance data for the commercial real estate industry. Long considered the industry benchmark, the EER gives real estate professionals the most current, dependable information available. Accessible in CD-ROM, network, and traditional printed formats, this year's edition features information and statistics on over 5,000 public and private sector buildings throughout the U.S. and Canada.

The EER is available in book or CD-ROM format. To order your copy of the 2005 Experience Exchange Report, please call (800) 426-6292 or visit www.boma.org. 

Founded in 1907, the Building Owners and Managers Association (BOMA) International is a dynamic international federation of over 100 local associations. The 19,000-plus members of BOMA International own or manage over 9 billion square feet of downtown and suburban commercial properties and facilities in North America and abroad. BOMA’s mission is to enhance the human, intellectual, and physical assets of the commercial real estate industry through advocacy, education, research, and standards. For more information, please visit the BOMA International Web site at www.boma.org.