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
Codes and Standards | May 19, 2022
JLL launches non-profit aiming to mitigate climate change
Real estate and investment management firm JLL recently launched JLL Foundation, a non-profit dedicated to making a long-term impact on environmental sustainability.
Office Buildings | May 19, 2022
JLL releases its 2022 Office Fit Out Guide
JLL’s 2022 Office Fit Out Guide report provides benchmark costs to build out a range of office types across major markets in the United States and Canada.
Biophilic Design | May 18, 2022
Horticulturalists conduct research study to understand the value of biophilic design
Benholm Group, horticulturalists that have pioneered the use of plants for interiors over the past 27 years, are collaborating on a research study to understand the value of biophilic design, according to a news release.
K-12 Schools | May 16, 2022
Private faculty offices are becoming a thing of the past at all levels of education
Perkins & Will’s recent design projects are using the area to encourage collaboration.
Codes and Standards | May 16, 2022
AIA releases Justice in the Built Environment guide
The American Institute of Architects (AIA) recently published a new supplementary edition of the Guides for Equitable Practice, titled “Justice in the Built Environment.”
K-12 Schools | May 16, 2022
A Quaker high school in Maryland is the first in the U.S. to get WELL Gold certification
Designed by Stantec, a Quaker high school is the first in the US to receive WELL Gold certification, which recognizes a commitment to occupants’ health and well-being.
Building Team | May 13, 2022
Glass penthouses rise above Toronto’s tree line
In midtown Toronto, the nine-story midrise building Leaside Common has released its Penthouse Collection: two-floor penthouses that take inspiration from Philip Johnson’s Glass House in Connecticut.
School Construction | May 11, 2022
New Digital Learning Commons at Rutgers supports doctoral programs in over 16 disciplines
The new Digital Learning Commons at the Rutgers University Archibald S. Alexander Library provides students in over 16 courses of study and four professional schools with spacious collaborative and study space.
Esports Arenas | May 11, 2022
Design firm Populous partners with esports company on digital art NFT collection
Design firm Populous and multidiscipline esports organization Kansas City Pioneers have partnered on a five-part NFT collection.
Multifamily Housing | May 11, 2022
Kitchen+Bath AMENITIES – Take the survey for a chance at a $50 gift card
MULTIFAMILY DESIGN + CONSTRUCTION is conducting a research study on the use of kitchen and bath products in the $106 billion multifamily construction sector.
