by Jbs091509 h3 — September 18, 2009—Total collections for suburban office complexes nationwide in 2008 increased a slight 1.3 percent from 2007 levels to $19.56 per square foot of net rentable area, according to a new study from the Institute of Real Estate Management (IREM).
In contrast, collections for downtown properties experienced a double-digit rise of 10 percent to $21.84 per square foot. Total actual collections for downtown properties were 11.7 percent more last year than their suburban counterparts.
These are among the major findings reported in the 2009 edition of the Income/Expense Analysis: Office Buildings, a new benchmarking study published by IREM. This annual research study, conducted by IREM since 1976, analyzes operating income and costs for 1,850 private-sector office complexes—some containing multiple buildings—in major metropolitan areas and regions in the U.S. It is designed to help property owners, managers, appraisers, developers and other real estate professionals evaluate their buildings’ performance and prepare budget and revenue projections, feasibility studies and more.
The benchmarking study contains detailed analyses of office building operating revenues and expenses for major metropolitan areas and suburban markets in the U.S. The income and expense data is presented in dollars per square foot for more than 50 specific categories broken out by building size, height, age, and rental range. Highlights of the findings follow.
Total operating costs for suburban buildings in 2008 rose 4.4 percent from the prior year to $8.84 per square foot of rentable area, while operating costs for downtown properties increased 9.1 percent to $10.29 per square foot. Nationally, net operating costs for suburban buildings increased a relatively slight 3.4 percent to $6.40 per square foot of rentable area in 2008 vs. 2007, whereas those for downtown properties increased 8.7 percent to $7.50 per square foot.
The national vacancy rate for suburban office properties in operation for 12 months rose 2 percent in 2008 compared to 2007, whereas the rate for downtown properties remained the same. The 2008 vacancy level for suburban properties was 7 percent; that of downtown properties was 5 percent.
IREM has also just published new 2009 editions of its four other annual Income/Expense Analysis studies: Conventional Apartments; Shopping Centers; Condominiums, Cooperatives & Planned Unit Developments; and Federally Assisted Apartments. All five studies are available from IREM’s Publications Web page.
