The Building Owners and Managers Association (BOMA) International has identified the most expensive commercial real estate markets in the U.S. The data is drawn from the 2011 Experience Exchange Report (EER), which provides an annual analysis of the office building operating income and expense data compiled across approximately 940 million square feet of commercial office space in more than 6,500 buildings in 278 different markets. The 2011 report is based on operating income and expenses from 2010.
The most expensive U.S. cities, based on total rental income, include:
- New York, N.Y., $48.27 per square foot (psf)
- Washington, D.C., $42.63 psf
- San Mateo, Calif., $41.61 psf
- Santa Monica, Calif., $36.67 psf
- San Francisco, Calif., $34.86 psf
- Boston, Mass., $31.15 psf
- San Jose, Calif., $30.35 psf
- Los Angeles, Calif., $27.97 psf
- West Palm Beach, Fla., $27.71 psf
- Chicago, Ill., $25.20 psf
Total rental income includes rental income from office, retail, and other space, which includes storage areas. Amid the economic downturn in real estate markets, few markets demonstrated significant increases in rental income, suggesting that rental rates remain relatively stable and favorable for tenants seeking to pursue new leases or renegotiate existing ones. Among the most expensive cities, only New York and San Francisco showed increases in rental income.
Gauging most expensive cities on the basis of total operating and fixed expenses produces a slightly different list:
- New York, N.Y., $21.44 psf
- Washington, D.C., $16.86 psf
- Boston, Mass., $15.16 psf
- Morristown, N.J., $14.67 psf
- San Francisco, Calif., $14.43 psf
- Miami, Fla., $12.87 psf
- Santa Monica, Calif., $12.84 psf
- Plainfield, N.J., $12.83 psf
- Chicago, Ill. and Los Angeles, Calif., 12.49 psf
- Newark, N.J., $12.46 psf
Total operating expenses includes all expenses incurred to operate office buildings, including utilities, repairs/maintenance, cleaning, administrative, security and roads and grounds. Fixed expenses include real estate taxes, property taxes and insurance. In New York, average total operating plus fixed expenses were $21.44 per square foot (psf), while in Los Angeles, they averaged $12.96 psf. Operating expenses increased in most markets in the last year. Fixed expenses were volatile, which could be attributed in part to rising utility costs as well as rising real estate taxes. While many cash-constrained cities and municipalities are looking to real estate for tax revenue, many property owners are contesting tax assessments because asset values have decreased due to the economic downturn. BD+C
Related Stories
Codes and Standards | May 30, 2017
Heated debate over whether Calif.’s prevailing wage requirement stymies affordable housing
There’s disagreement around how much pay regulations add to cost of projects.
Reconstruction & Renovation | May 30, 2017
Achieving deep energy retrofits in historic and modern-era buildings [AIA course]
Success in retrofit projects requires an entirely different mindset than in new construction, writes Randolph Croxton, FAIA, LEED AP, President of Croxton Collaborative Architects.
Architects | May 26, 2017
Innovations in addressing homelessness
Parks departments and designers find new approaches to ameliorate homelessness.
Architects | May 26, 2017
BIG plans: Architecture isn’t Bjarke Ingels Group’s only growth path
Kai-Uwe Bergmann, the firm’s head of global business development, says engineering and urban planning are key opportunities. And how about that Hyperloop?
Museums | May 25, 2017
The museum as workspace
Many museum staff are resistant to the idea of open offices.
| May 24, 2017
Accelerate Live! talk: Applying machine learning to building design, Daniel Davis, WeWork
Daniel Davis offers a glimpse into the world at WeWork, and how his team is rethinking workplace design with the help of machine learning tools.
| May 24, 2017
Accelerate Live! talk: Learning from Silicon Valley - Using SaaS to automate AEC, Sean Parham, Aditazz
Sean Parham shares how Aditazz is shaking up the traditional design and construction approaches by applying lessons from the tech world.
| May 24, 2017
Accelerate Live! talk: The data-driven future for AEC, Nathan Miller, Proving Ground
In this 15-minute talk at BD+C’s Accelerate Live! (May 11, 2017, Chicago), Nathan Miller presents his vision of a data-driven future for the business of design.
Architects | May 23, 2017
Queens Museum exhibit shows New York City as it could have been
The installation will showcase 200 years worth of unrealized Big Apple projects via original drawings, renderings, newly commissioned models, and 3D visualizations.
Education Facilities | May 22, 2017
Educational design taking lessons from tech firms
Recently, in educational design, we have seen a trend toward more flexible learning spaces.