According to a study of data from the Building Owners and Managers Association (BOMA) International’s Experience Exchange Report (EER) by Kingsley Associates, the commercial real estate industry’s ongoing focus on energy efficiency has resulted in a downward trend in total operating expenses.
Analysis reveals that properties in the United States reduced total operating expenses from $8.18 to $7.86 per square foot (psf) on average from 2011 to 2012, a difference of $0.32 or 3.9 percent. About two-thirds of these savings were achieved in the utility category, where average expenses fell $0.21—a whopping 9.0 percent—to $2.12 psf, underscoring an industry focus on maximizing building efficiency and smart asset management.
Nearly all building types boasted operating expense savings during 2012. Only corporate facilities saw total operating expenses remain essentially unchanged with a slight 0.5 percent increase. Downtown buildings remained, on average, more expensive to operate than their suburban counterparts, and they also reported a slightly smaller expense savings (4.1 percent versus 6.4 percent for suburban buildings).
As with total operating expenses, the decrease in utility expenses per square foot in 2012 also was broad-based. Private sector office buildings in both downtown and suburban locations observed an identical 9.3 percent reduction, though costs remain higher at downtown locations. Multi-tenanted buildings were able to achieve greater savings than corporate or single-tenanted facilities (9.6 percent versus 3.8 percent), but the trend was the same for both. However, not all property types saw a decline in this area. Utility costs rose 2.7 percent at medical office buildings and 4.2 percent at government-occupied facilities.
In addition to substantial savings on utilities, analysis also revealed that private sector office buildings spent $0.06 (4.0 percent) less per square foot on cleaning in 2012. Cleaning and administrative expenses are essentially tied as the third largest expense categories, behind utilities and repairs/maintenance. Building owners and managers were also able to make modest cuts in security and roads/grounds expenses (a $0.03 decrease in each category), though these categories are small relative to others.
These findings are based on an examination of a specialized control sample of more than 2,000 private sector buildings representing 385 million rentable square feet of U.S. office space that submitted both 2011 and 2012 expense data to the EER database. The sample only includes buildings meeting certain criteria in order to control for the impact of major renovations and changes in occupancy on operating expenses to ensure trends captured are representative of market reality. A complete analysis can be found in the latest issue of The BOMA Magazine.
With detailed income and expense information from more than 5,300 buildings across more than 250 markets, BOMA International’s Experience Exchange Report (EER) is commercial real estate’s premier income and expense benchmarking tool with the largest and most accurate data available in the industry. The EER allows users to conduct multi-year analysis of single markets and select multiple cities to generate state and regional reports. It also offers the capability to search by market, submarket, building size, building type and more for broader analysis. The 2013 Experience Exchange Report is available now at www.bomaeer.com.
About BOMA International
The Building Owners and Managers Association (BOMA) International is a federation of 93 BOMA U.S. associations, BOMA Canada and its 11 regional associations and 13 BOMA international affiliates. Founded in 1907, BOMA represents the owners and managers of all commercial property types, including nearly 10 billion square feet of U.S. office space that supports 3.7 million jobs and contributes $205 billion to the U.S. GDP. Its mission is to advance the interests of the entire commercial real estate industry through advocacy, education, research, standards and information. Find BOMA online at www.boma.org.
About Kingsley Associates
The most successful firms in real estate rely on Kingsley Associates for cutting-edge business intelligence solutions. With a depth and breadth of insight unmatched in the industry, Kingsley Associates brings thought leadership and passionate client service to every engagement. Kingsley Associates is a leader in tenant satisfaction surveys, resident satisfaction surveys, client perception studies, strategic consulting and operations benchmarking. To learn more, please visit our website at www.kingsleyassociates.com or our blog at www.kingsleyinsight.com.
Related Stories
| Nov 13, 2013
Government work keeps green AEC firms busy
With the economy picking up, many stalled government contracts are reaching completion and earning their green credentials.
| Nov 13, 2013
Installed capacity of geothermal heat pumps to grow by 150% by 2020, says study
The worldwide installed capacity of GHP systems will reach 127.4 gigawatts-thermal over the next seven years, growth of nearly 150%, according to a recent report from Navigant Research.
| Nov 13, 2013
First look: Renzo Piano's addition to Louis Kahn's Kimbell Art Museum [slideshow]
The $135 million, 101,130-sf colonnaded pavilion by the famed architect opens later this month.
| Nov 11, 2013
4 trends driving the recovering commercial construction sector
Jones Lang LaSalle research reveals a four-point “new look” for the post-recession construction industry.
| Nov 8, 2013
Oversized healthcare: How did we get here and how do we right-size?
Healthcare facilities, especially our nation's hospitals, have steadily become larger over the past couple of decades. The growth has occurred despite stabilization, and in some markets, a decline in inpatient utilization.
| Nov 8, 2013
Can Big Data help building owners slash op-ex budgets?
Real estate services giant Jones Lang LaSalle set out to answer these questions when it partnered with Pacific Controls to develop IntelliCommand, a 24/7 real-time remote monitoring and control service for its commercial real estate owner clients.
| Nov 8, 2013
S+T buildings embrace 'no excuses' approach to green labs
Some science-design experts once believed high levels of sustainability would be possible only for low-intensity labs in temperate zones. But recent projects prove otherwise.
| Nov 8, 2013
Net-zero bellwether demonstrates extreme green, multifamily style
The 10-unit zHome in Issaquah Highlands, Wash., is the nation’s first net-zero multifamily project, as certified this year by the International Living Future Institute.
| Nov 8, 2013
Walkable solar pavement debuts at George Washington University
George Washington University worked with supplier Onyx Solar to design and install 100 sf of walkable solar pavement at its Virginia Science and Technology Campus in Ashburn, Va.
| Nov 7, 2013
Fitness center design: What do higher-ed students want?
Campus fitness centers are taking their place alongside student centers, science centers, and libraries as hallmark components of a student-life experience. Here are some tips for identifying the ideal design features for your next higher-ed fitness center project.
