by Brianna Crandall — October 1, 2014—The Building Owners and Managers Association (BOMA) International, using the results from its 2014 Experience Exchange Report (EER), has compiled a list of the most and least expensive commercial real estate city-markets in the United States. The annual report aggregates income and expense data from the previous year; 2013 data was gathered from more than 5,700 buildings across 250 markets representing more than a billion square feet of space in the United States and Canada.
Total operating expenses incorporate all expenses incurred to operate office buildings, including utilities, repairs and maintenance, roads and grounds, cleaning, administration and security. All five of the most expensive markets for operating expenses remained unchanged from the previous year’s rankings, with New York once again topping the list with average total operating expenses of $11.77 per square foot. At $5.17 per square foot, Raleigh, North Carolina, replaced Salt Lake City in 2013 as the market with the lowest reported operating expenses. Overall operating expenses saw a slight increase in 2013, as the industry began to recover and previously intensive cost-cutting measures were relaxed, notes BOMA.
Five Most Expensive Markets—Total Operating Expenses:
- New York, New York—$11.77 per square foot (psf)
- San Francisco, California—$10.09 psf
- Washington, DC—$9.63 psf
- Santa Monica, California—$9.62 psf
- San Jose, California—$8.96 psf
Five Least Expensive Markets—Total Operating Expenses:
- Raleigh, North Carolina—$5.17 per square foot (psf)
- Salt Lake City, Utah—$5.39 psf
- Orlando, Florida—$6.01 psf
- Dallas, Texas—$6.03 psf
- Nashville, Tennessee—$6.08 psf
Total rental income includes rental income from office, retail and other space, such as storage areas. While Huntsville, Alabama, saw an average total rental income per square foot of $12.89 in 2013, on the opposite end of the spectrum, New York averaged a total income rate of more than four times that amount at $51.67. Washington, DC, the top commercial real estate market for rental income in 2012, dropped to second place in 2013 with an average total rental income of $45.24 per square foot; however, the DC market still saw a year-over-year increase in rental income of nearly one dollar per square foot. Overall rental income increased in 2013, signaling continued economic recovery in the commercial real estate industry, concludes BOMA.
Five Most Expensive Markets—Total Rental Income:
- New York, New York—$51.67 per square foot (psf)
- Washington, DC—$45.24 psf
- San Mateo, California—$42.71 psf
- Santa Monica, California—$38.64 psf
- Boston, Massachusetts—$35.37 psf
Five Least Expensive Markets—Total Rental Income:
- Huntsville, Alabama—$12.89 per square foot (psf)
- Tucson, Arizona—$13.22 psf
- Columbus, Ohio—$15.92 psf
- Saint Louis, Missouri—$16.42 psf
- Phoenix, Arizona—$16.63 psf
BOMA’s Experience Exchange Report is a comprehensive commercial real estate benchmarking tool with office building and medical office building data. An EER subscription allows users to generate customized reports.
