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
Airports | Oct 5, 2015
Perkins+Will selected to design Istanbul’s 'Airport City'
The mixed-use development will be adjacent to the Istanbul New Airport, which is currently under construction.
High-rise Construction | Oct 5, 2015
Zaha Hadid designs cylindrical office building with world’s tallest atrium
The 200-meter-high open space will cut the building in two.
Architects | Oct 2, 2015
Herzog & de Meuron unveils design for Vancouver Art Gallery expansion
The blocky, seven-story wood and concrete structure is wider in the middle and uppermost floors.
Airports | Sep 30, 2015
Takeoff! 5 ways high-flyin' airports are designing for rapid growth
Nimble designs, and technology that humanizes the passenger experience, are letting airports concentrate on providing service and generating revenue.
Contractors | Sep 30, 2015
FMI: Construction in place on track for sustained growth through 2016
FMI’s latest report singles out manufacturing, lodging, and office sectors as the drivers of nonresidential building activity and investment.
Reconstruction & Renovation | Sep 29, 2015
What went wrong? Diagnosing building envelope distress [AIA course]
With so many diverse components contributing to building envelope assemblies, it can be challenging to determine which of these myriad elements was the likely cause of a failure.
Architects | Sep 24, 2015
Supertall buildings vie for dominance along Chicago’s skyline
The latest proposals pit designs by Rafael Viñoly, Jeanne Gang, and Helmut Jahn.
Architects | Sep 24, 2015
From Gehry to the High Line: What makes a project a game-changer?
Each year, there are a handful of projects that significantly advance the AEC industry or a particular building type. Send us your game-changing projects for BD+C’s January 2016 special report.
Cultural Facilities | Sep 24, 2015
Bakpak Architects' 'pottery courtyard' concept in Poland incorporates local heritage
The multifunctional building proposed for Rzeszow, Poland, looks like it was handcrafted on a potter’s wheel.
Modular Building | Sep 23, 2015
SOM and DOE unveil 3D-printed, off-the-grid building
The Additive Manufacturing Integrated Energy (AMIE) building features a high-performance shell with a photovoltaic roof and built-in natural gas generator.