Building  Owners  and  Managers  Association  International

Building Owners and Managers Association International

BOMA Benchmarking Reports Shows Property Managers Tightly Controlled Operating Expenses in 2009

July 13, 2010

​FOR IMMEDIATE RELEASE

2010 Experience Exchange Report Details Income and Expense Data in More than 250 Markets

(WASHINGTON—July 13, 2010) Property managers tightly controlled operating expenses throughout 2009, according to the 2010 Experience Exchange Report (EER), released by the Building Owners and Managers Association (BOMA) International in collaboration with Kingsley Associates. Analysis of operating income and expense data from “same buildings”—those who submitted data in both 2009 and 2010, whose total rentable area did not change by more than 10 percent and whose occupancy did not change by more than 15 percent—reveals that total operating expenses for U.S. private sector buildings declined by a little more than one percent. The decrease in total operating expenses illustrates what commercial real estate managers have noted all year: there is considerable pressure to reduce operating expenses and maintain strong net operating income. Rental income for all U.S. private sector buildings increased marginally, up one percent in 2009. For U.S. private sector downtown buildings, rental income increased 2.5 percent in 2009.

With data from 4,200 buildings in more than 250 markets, the EER® is the most comprehensive resource for financial performance information on private and public office buildings in the U.S. and Canada. It includes national trends analysis and city market-level reports, as well as reports for special use facilities, such as medical office buildings, corporate facilities, financial buildings, agency managed and all electric buildings.

“The recession has slowed the volume of sale transactions, placing tremendous importance on maximizing both asset value and net operating income through effective day-to-day management of buildings,” commented BOMA International Chair Ray H. Mackey, Jr., RPA, CPM, CCIM, partner and chief operating officer, Stream Realty Partners, L.P. “BOMA’s EER is an excellent tool for property managers and property owners to have in their arsenals. It gives them a concise snapshot of how their buildings stack up relative to similar types of properties across a comprehensive spectrum of income and expense categories.”

Additional analysis of the two year “same building” sample reveals the following trends in office buildings’ financial performance:

  • Control of utility expenses remains a high priority for most management teams. For U.S. private sector suburban buildings, utilities expenses decreased 9.6 percent during 2009, from $2.49 per square foot (psf) to $2.25 psf. In U.S. private sector downtown buildings, utilities expenses decreased 4.4 percent, from $2.48 psf to $2.37 psf.
  • Fixed expenses, including real estate taxes, continue to climb. For U.S. private sector downtown buildings, fixed expenses increased from $4.50 psf to $4.65 psf, a 3.3 percent increase. The jump likely reflects an increase in real estate taxes, which constitute the largest share of the fixed expenses category. Suburban buildings, however, only experienced a one-cent increase in fixed expenses, from $3.09 psf in 2008 to $3.10 psf in 2009. For U.S. private sector downtown buildings, office rental income increased 2.5 percent, from $25.96 psf in 2008 to $26.62 psf in 2009, though total income dropped 1.3 percent, from $28.42 psf in 2008 to $28.04 psf in 2009. PR071310.gif
  • For U.S. private sector buildings, retail rent increased 21.7 percent, from $17.65 psf in 2008 to $21.48 in 2009. Retail occupancy for all U.S. private sector buildings dropped 1.3 percent. For downtown properties, it decreased just 0.3 percent. Suburban properties saw a more significant drop in retail occupancy, a decrease of more than 10 percent.
  • Despite gains in retail rent, miscellaneous income dropped 11.0 percent, from $1.55 psf in 2008 to $1.38 psf in 2009. The drop in miscellaneous income may be due to a drop off in retail sales, as miscellaneous income includes retail income as a percentage rent from retail sales as well as gross parking income; tenant service income; and other income from such sources as vending machines, signage, late charges, health club, etc.
  • For all U.S. private sector buildings, fixed expenses, the largest portion of which consists of real estate taxes, have consistently been the largest percentage of total expenses (35 percent in 2009). Utilities were the second largest portion of total expenses (19 percent of expenses in 2009).

Now in its 90th year, the EER continues to be the single most detailed and most reputable source of benchmarking data representing the office building industry across North America. Last year, the EER transitioned to a new online format through the collaboration with commercial real estate research firm Kingsley Associates. The online format allows users to query data by market, submarket, building size, building type, age of the building, ownership type and more. The data can be exported into charts, PDFs and Excel files, allowing users to expedite analysis, build budgets faster and easily create presentations.

The 2010 EER, with data from 2009, is available now at www.bomaeer.com.

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About BOMA International
The Building Owners and Managers Association (BOMA) International is an international federation of more than 100 local associations and affiliated organizations. Founded in 1907, its 17,000-plus members own or manage more than nine billion square feet of commercial properties. BOMA International’s mission is to enhance the human, intellectual and physical assets of the commercial real estate industry through advocacy, education, research, standards and information. On the Web at www.boma.org.

Contact
Lindsay Tiffany
Manager of Media Relations
BOMA International
(202) 326-6365
ltiffany@boma.org