by Brianna Crandall — October 29, 2012—With the election only weeks away, many commercial real estate professionals are considering the current state of the market and searching for signs of recovery as they contemplate their final electoral decisions. According to historical data trends from BOMA International’s annual Experience Exchange Report (EER), while market growth has been slow, income has increased and expenses have dropped. BOMA International concludes that the commercial real estate industry is recovering and indeed better off now than it was four years ago.
Since 2008, average total rental income earned per square foot (psf) has increased by $1.56, while total operating expenses—including fixed expenses—have decreased by $.20 psf, according to the report. Total income levels also improved over the past four years, increasing by $1.57 psf to $26.90 psf.
According to the report, 57 percent of all expenses decreased in cost over the past four years. The largest decrease in expenses was the price of roads and grounds upkeep, which decreased by 4.3 percent to $.22 psf. The cost of utilities, cleaning and security also decreased. Utility costs dropped 3.7 percent since 2008 to $2.33 psf, while cleaning and security costs both decreased by 2.8 percent to $1.39 psf and $.69 psf, respectively.
“These findings demonstrate improving conditions in commercial real estate markets over the past four years,” said BOMA International Chair Joseph W. Markling, managing director of Strategic Accounts at CBRE. “Much of this recovery has been aided by the innovative ways that building owners and property managers have found to decrease expenses—particularly energy costs—through dedication to sustainable practices and maximize value via benchmarking tools like the Experience Exchange Report. Overall, we remain optimistic about the future of the commercial real estate industry.”
The Experience Exchange Report (EER) is an income and expense data benchmarking tool for the commercial real estate industry. The EER allows users to conduct multiyear analysis of single markets and special-use facilities, providing valuable analytic insight into the performance and efficiency of individual buildings compared to other buildings and markets in the United States and Canada.
