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
Sports and Recreational Facilities | Sep 8, 2022
Chicago Bears unveil preliminary master plan for suburban stadium district
As the 2022 NFL season kicks off, the league’s original franchise is fortifying plans to leave its landmark lakefront stadium for a multi-billion-dollar mixed-use stadium district in northwest suburban Arlington Heights.
| Sep 8, 2022
The Twin Cities’ LGBTQ health clinic moves into a new and improved facility
For more than 50 years, Family Tree Clinic has provided reproductive and sexual health services to underserved populations—from part of an old schoolhouse, until recently.
| Sep 8, 2022
U.S. construction costs expected to rise 14% year over year by close of 2022
Coldwell Banker Richard Ellis (CBRE) is forecasting a 14.1% year-on-year increase in U.S. construction costs by the close of 2022.
Giants 400 | Sep 7, 2022
Top 110 Industrial Sector Contractors + CM Firms for 2022
Clayco, Arco Construction, Ryan Companies, and STO Building Group top the ranking of the nation's largest industrial facility sector contractors and construction management (CM) firms for 2022, as reported in Building Design+Construction's 2022 Giants 400 Report.
| Sep 7, 2022
K-8 school will help students learn by conducting expeditions in their own communities
In August, SHP, an architecture, design, and engineering firm, broke ground on the new Peck Expeditionary Learning School in Greensboro, N.C. Guilford County Schools, one of the country’s 50 largest school districts, tapped SHP based on its track record of educational design.
| Sep 6, 2022
Herbert V. Kohler, Jr. (1939-2022) An incomparable spirit
Dynamic leader and Kohler Co. Executive Chairman Herbert Vollrath Kohler, Jr. passed away on September 3, 2022, in Kohler, Wisconsin.
| Sep 6, 2022
Demand for flexible workspace reaches all-time high
Demand for flexible workspace including coworking options has never been higher, according to a survey from Yardi Kube, a space management software provider that is part of Yardi Systems.
| Sep 2, 2022
Converting office buildings to apartments is cheaper, greener than building new
Converting office buildings to apartments is cheaper and greener than tearing down old office properties and building new residential buildings.
| Sep 2, 2022
New UMass Medical School building enables expanded medical class sizes, research labs
A new nine-story, 350,000 sf biomedical research and education facility under construction at the University of Massachusetts Chan Medical School in Worcester, Mass., will accommodate larger class sizes and extensive lab space.
| Sep 1, 2022
ABC: Nonresidential Construction Spending Increases by a Modest 0.8% in July
National nonresidential construction spending increased 0.8% in July, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
