by Brianna Crandall — September 11, 2015—The Institute of Real Estate Management (IREM), an affiliate of the National Association of REALTORS that serves both the multifamily and commercial sectors, recently released the 2015 Income/Expense Analysis Reports for five property types: Conventional Apartments, Office Buildings, Shopping Centers, Federally Assisted Apartments, Condominiums, Cooperatives and Planned Unit Developments. IREM also released the related Metro Reports — for professionals who just need an individual metropolitan market area report — which now include region and national data. These reports were based on the largest-ever number of properties that were sampled for this data, notes IREM.
IREM released the 2015 Income/Expense Analysis Reports for five property types: Conventional Apartments, Office Buildings, Shopping Centers, Federally Assisted Apartments, Condominiums, Cooperatives and Planned Unit Developments.
Each Income/Expense Analysis Report delivers the tools to plan, budget and forecast — and to enable real estate management professionals to stay one step ahead of the competition by making data-driven decisions. These benchmarking resources empower facilities, property and real estate professionals to understand how properties operate and make big data from thousands of properties work for them, providing a baseline to compare property data in their immediate market and region.
Lori Burger, CPM, IREM president, Eugene Management Burger Corporation, AMO, Rohnert Park, California, commented:
IREM Income/Expense Analysis Reports enable property owners and managers, investors, appraisers, lenders, developers and other real estate professionals to evaluate and optimize a building’s performance. These resources are used for building better budgets, identifying ways to trim waste, addressing inefficiencies, making needed improvements, preparing feasibility studies, appraisals and loan requests, and more.
PROPERTY TYPES
OFFICE BUILDINGS
The 2015 Income/Expense Analysis: Office Buildings Report analyzes operating income and costs for 2,200 private-sector office complexes — some containing multiple buildings — in major metropolitan areas and regions in the United States. Additionally, it contains financial data that is broken out separately for 456 medical office buildings.
Highlights
- Total collections for suburban office complexes nationwide in 2014 increased 4.2% from 2013 levels to $19.50 per square foot (psf) of net rentable area. Downtown properties experienced a 6.8% year-to-year collections increase to $22.93 psf. Total actual collections for downtown properties were 17.6% greater last year than their suburban counterparts, versus 14.7% higher the prior year.
- Total operating costs for suburban buildings in 2014 increased 2% from the prior year to $8.56 psf of rentable area, while those for downtown properties rose 8.1% to $11.14 psf.
- Nationally, net operating costs for suburban buildings last year rose 5.2% to $6.31 psf of rentable area, whereas costs for downtown properties increased 6.8% to $7.84 psf.
- The national vacancy rate for suburban properties in operation for 12 months was 6% in 2014, which marked a fall from last year. Downtown properties experienced a 7% vacancy rate.
CONVENTIONAL APARTMENTS
The 2015 Income/Expense Analysis: Conventional Apartments Report is designed to enable real estate professionals to evaluate multifamily development and investment options and compare their buildings’ performance to industry norms. The income and expense data for each sample is presented in dollars per square foot (psf) of rentable area and as a percentage of gross possible income and dollars per unit. Individual metro market reports for more than 120 cities also are included along with an analysis of vacancy rates and operating unit trends, plus a variety of historical trend reports. The study summarizes data by building type, age, Section 42 properties, turnover and more.
Highlights
- Net operating income (NOI) for garden buildings rose 6.3% to $5.91 psf; NOI for elevator buildings rose 5.9% to $11.07 psf; NOI for low-rise buildings with 25 or more units rose a mere 0.6% to $6.30 psf; and NOI for low-rise buildings with 12-24 units dropped 12.9% to $4.93 psf.
- Regarding gross possible rents, elevator buildings reported the highest increase, 4.4%, raising the rent per square foot to $18.63. Garden buildings reported a 3.0% gain to $11.36 psf; low-rise buildings with 25-plus units reported a 2.1% rent increase to $11.82 psf; and low-rise buildings with 12 to 24 units reported a rent increase of 1.4% to $11.96 psf.
- In terms of expenses, those for low-rise buildings with 25 or more units rose 5.1% to $5.52 psf; and those for elevator buildings increased 4.1% to $8.14 psf; expenses for garden buildings rose 2.7% to $5.26 psf; and those for low-rise buildings with 12-24 units rose 2.0% to $6.17 psf.
SHOPPING CENTERS
The 2015 Income/Expense Analysis: Shopping Centers Report analyzes the previous year’s operating data for 402 open shopping centers throughout the United States. It is designed to provide real estate professionals and investors with current financial data for evaluating the performance of their properties and for preparing appraisals, budgets, loan requests and sales proposals. The study breaks down open shopping center operating data into several categories, including property size, age, type of anchor, type of lease, average actual occupancy (AAO), and gross leasable area (GLA). The study includes national, regional and metropolitan statistics, along with several special reports including leasing fees, expansion, tenant turnover, type of ownership and gross sales analysis.
Highlights
- Median income for open shopping centers across the country in 2014, based on average actual occupancy (AAO), increased to $17.70 per square foot (psf) from $17.18 the prior year. Open center operating costs increased to $5.27 psf from $5.07 in 2013.
- Broken out regionally, median income for open centers in 2014 ranged from $15.28 to $25.45 psf, versus a range of from $14.28 to $23.43 psf in 2013. The Northeast and Mid-Atlantic regions reported the highest income psf at $25.45.
- In terms of expenses, insurance and taxes in 2014 accounted nationally for 45.0% of the typical open center’s total operating costs; contracted services — such as landscaping, security and trash removal — accounted for 14.2%; and maintenance/repair and utilities accounted for 8.0% and 8.7%, respectively. The percentage breakdowns for major expenses this past year are quite similar to those for 2013.
FEDERALLY ASSISTED APARTMENTS
The 2015 Income/Expense Analysis: Federally Assisted Apartments Report analyzes the previous year’s operating data for 891 high-rise (elevator buildings), low-rise and garden-style properties nationwide — containing 83,414 units — that receive one of six types of federal assistance: HUD Sections 202, 221(d)3, 236, Section 8 Elderly/Handicap and Section 8 Family and Rural Development Section 515. Additionally, the study breaks down operating figures into several categories, such as building type, subsidy type, and property size and age. Regional and city reports are also included.
Highlights
- Operating expenses in 2014, Section 221(d)3 low-rise buildings experienced the lowest expenses in 2014 at $5.17. Section 202 elevator buildings reported the highest total expenses, $10.74 in 2014. Total Expenses decreased for all garden subsidies over the last two years, with the exception of Section 8 family buildings.
- In terms of net income by subsidy type, Section 202 building categories in 2014 ranged from $2.26 to $10.68 per square foot (psf); Section 221(d)3 buildings ranged from $5.97 to $6.51 psf; Section 236 buildings ranged from $2.58 to $4.68 psf; Section 8 Elderly/Handicapped buildings ranged from $4.69 to $6.65 psf; and Section 8 Family buildings ranged from $3.97 to $5.93 psf.
- Elevator buildings reported median net operating income ranging from $5.93 to $10.68 psf. Median net operating income for low-rise buildings ranged from $2.58 to $4.69 psf, and that for garden buildings ranged from $2.26 to $6.65 psf.
CONDOMINIUMS, COOPERATIVES, AND PLANNED UNIT DEVELOPMENTS
The 2015 Expense Analysis: Condominiums, Cooperatives and Planned Unit Developments Report analyzes the previous year’s operating cost figures from 2,214 properties in the United States and Canada, representing 290,807 units. It is designed to enable condominium, co-op and planned unit development (PUD) boards and property managers to benchmark their associations’ financial condition, calculate assessments and necessary replacement reserves, and develop and evaluate budgets. Additionally, the study summarizes data by association type (condominiums, cooperatives and planned unit developments) and building type (high-rise, low-rise and townhouse). It provides an analysis of more than 30 expense categories, hundreds of operating breakdowns, median monthly assessments and an amenity package analysis.
Highlights
- Median total annual operating expenses for all condominium building types as a group increased 5.3% in 2014 to $2,649.76 per unit from $2,517.25 per unit in 2013. Similarly, condominium dwellers as a group paid 7.0% more in assessments last year, with the median monthly assessment amounting to $273.94 per unit, compared with $256.02 the prior year. The typical association added $637.50 per unit to its reserve fund, versus $555.00 in 2013, representing 24.1% of total operating expenses.
- Breaking out per-unit operating expenses by condominium type, those for high-rise properties increased the most, 10.7%, rising to $4,732.80. Those for low-rise properties also increased, 6.6%, to $2,561.31, as did those for townhouses developments, rising 3.2% to $2,116.93; and combination properties increased a mere 0.2% to $2,040.35.
- Breaking out reserves by building type, low-rise properties added annual reserves of $637.50 per unit, amounting to 24.9% of total operating expenses; townhouse developments added reserves of $502.57, equal to 23.7% of total operating expenses; high-rise properties added reserves of $887.31 per unit, 18.7% of total operating expenses; and combination units added reserves of $434.72 per unit, or 21.3% of total operating expenses.
Each Income/Expense Analysis Report by property type is available in several formats: books, interactive PDFs with downloadable Excel files, and Online Labs, with 24/7 access to more than 15 years of data, with 100 customizable line-item options and downloadable Excel report capability. The Metro Reports are available individually as well as part of a Flex Package for additional savings.
