by Brianna Crandall — August 29, 2016 — Annual Income / Expense Analysis Reports for benchmarking, budgeting and forecasting to optimize a building’s performance are now available through the Institute of Real Estate Management (IREM), an affiliate of the National Association of REALTORS that serves both the multifamily and commercial sectors. The reports cover five different property types and allow real estate management professionals to evaluate and plan by comparing the data of thousands of properties locally, regionally and nationally.
Highlights of national trends by property type from the reports are listed below.
Office buildings:
- Vacancy rates in the office sector continue to trend downward, putting upward pressure on asking rents.
- Net operating income (NOI) for suburban properties rose 3.9 percent to $13.71 per square foot; NOI for downtown properties declined by 5.7 percent to $14.23 per square foot.
- The national vacancy rate for suburban properties in operation for 12 months was 4 percent in 2015, down 2 points from the prior year. Downtown properties experienced an 8 percent vacancy rate, up 1 percent from 2014.
Conventional apartments:
- The conventional apartment industry experienced a spectacular year in 2015 with substantial growth in both rents and occupancy levels.
- Three of the four building types reported increases in gross possible apartment rent in 2015:
- Elevator buildings reported the highest increase in gross possible rents, 7.9%, raising the rent from $17.85/sq. ft. in 2014 to $19.26/sq. ft. in 2015.
- The rent in garden buildings increased 3.5% to $11.86/sq. ft.
- Low-rise buildings with 25 or more units experienced an increase of 0.3% to $11.74/sq. ft.
- Low-rise buildings with 12-24 units saw no change and remained at $12.44/sq. ft. in 2015.
Shopping centers:
- Shopping centers and other brick and mortar retail stores have been hit hard in recent years, mostly due to the recession and the trend towards online shopping.
- Retail square footage per capita is declining.
- Median income for open shopping centers across the country in 2015, based on average actual occupancy (AAO), fell to $16.58 per square foot from $17.70 in 2014.
- Open center operating costs fell to $5.10 per square foot from $5.27 in 2014.
Federally assisted apartments:
- The affordable housing sector is stable, and in some respects, thriving — the need for affordable housing has never been greater.
- Continuing rent increases paired with limited income growth has increased the need for affordable housing.
- Elevator buildings reported median NOI ranging from $6.32 to $8.00 per square foot; low-rise buildings ranging from $2.26 to $4.83 per square foot; and garden buildings ranging from $2.72 to $6.47 per square foot.
Condominiums, cooperatives, and planned unit developments (PUDs):
- The decline in home ownership and the level of foreclosures continues to raise the number of renters occupying condominium, co-ops and PUDs — investors are buying up units specifically to rent instead of occupying them.
- Median total annual operating expenses for all condominium building types increased 11.4 percent in 2015 to $2,950.88 per unit from $2,649.76 per unit in 2014.
- Similarly, condominium dwellers as a group paid 10.6 percent more in assessments in 2015, with the median monthly assessment amounting to $303.00 per unit, compared with $273.94 in 2014.
The Income / Expense Analysis Reports are available in several formats — softcover books, interactive PDF and Excel files, and online labs (with over 15 years of data, with customizable reporting). Metro Reports are also available for individual metropolitan markets that include both regional and national data. Access detailed data breakdowns on rent, maintenance, payroll, utilities, vacancies, and more.
