by Brianna Crandall — December 9, 2011—The Building Owners and Managers Association (BOMA) International has identified the least expensive commercial real estate markets in the United States. The data is drawn from BOMA’s 2011 Experience Exchange Report (EER), which provides a yearly 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 contains data from 2010.
The least expensive U.S. cities, based on total rental income, are:
- Shreveport, LA, at $10.47 per square foot (psf)
- Nashville, TN, at $13.31 psf
- Tulsa, OK, at $13.73 psf
- Dayton, OH, at $13.97 psf
- Columbus, OH, at $13.99 psf
- Boise, ID, at $14.64 psf
- Omaha, NE, at $15.23 psf
- Harrisburg, PA, at $15.45 psf
- Oklahoma City, OK, at $15.78 psf
- Jacksonville, FL, at $15.90 psf
BOMA defines “total rental income” as comprising 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. In Shreveport, average total rental income was $10.47 per square foot (psf), while in Jacksonville it was $15.90 psf. In Dayton and Omaha, total rental income increased by 10 percent from 2009 to 2010, while in Shreveport, it dropped by four percent.
When BOMA gauged the least expensive cities on the basis of total operating and fixed expenses, it produced a significantly different list:
- Fresno, CA, at $4.25 psf
- Jackson, MI, at $4.97 psf
- Baton Rouge, LA, at $5.48 psf
- Virginia Beach, VA, at $6.20 psf
- Everett, WA, at $6.36 psf
- Little Rock, AR, at $6.59 psf
- Oklahoma City, OK, at $6.66 psf
- Salt Lake City, UT, at $6.68 psf
- Raleigh, NC, at $7.00 psf
- Norfolk, VA, at $7.20 psf
BOMA defines “total operating expenses” as comprising 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 Fresno, average total operating and fixed expenses were $4.25 psf, while the average in Norfolk was $7.20. From 2009 to 2010, the average cost of total operating and fixed expenses increased in Raleigh by ten percent, while Little Rock and Everett saw decreases of eight and 12 percent, respectively.
The new data is based on BOMA’s 2011 Experience Exchange Report, which BOMA reports is considered the industry gold standard for benchmarking income and expense data in commercial building data. The report provides valuable analytic insight into the performance and efficiency of office buildings in markets in the United States and Canada. The report includes trends analysis and city-market level reports, as well as reports for special-use facilities such as medical office buildings, corporate facilities, financial buildings, agency-managed and all-electric buildings.
