According to a study of data from the Building Owners and Managers Association (BOMA) International’s Experience Exchange Report (EER) by Kingsley Associates, the commercial real estate industry’s ongoing focus on energy efficiency has resulted in a downward trend in total operating expenses.
Analysis reveals that properties in the United States reduced total operating expenses from $8.18 to $7.86 per square foot (psf) on average from 2011 to 2012, a difference of $0.32 or 3.9 percent. About two-thirds of these savings were achieved in the utility category, where average expenses fell $0.21—a whopping 9.0 percent—to $2.12 psf, underscoring an industry focus on maximizing building efficiency and smart asset management.
Nearly all building types boasted operating expense savings during 2012. Only corporate facilities saw total operating expenses remain essentially unchanged with a slight 0.5 percent increase. Downtown buildings remained, on average, more expensive to operate than their suburban counterparts, and they also reported a slightly smaller expense savings (4.1 percent versus 6.4 percent for suburban buildings).
As with total operating expenses, the decrease in utility expenses per square foot in 2012 also was broad-based. Private sector office buildings in both downtown and suburban locations observed an identical 9.3 percent reduction, though costs remain higher at downtown locations. Multi-tenanted buildings were able to achieve greater savings than corporate or single-tenanted facilities (9.6 percent versus 3.8 percent), but the trend was the same for both. However, not all property types saw a decline in this area. Utility costs rose 2.7 percent at medical office buildings and 4.2 percent at government-occupied facilities.
In addition to substantial savings on utilities, analysis also revealed that private sector office buildings spent $0.06 (4.0 percent) less per square foot on cleaning in 2012. Cleaning and administrative expenses are essentially tied as the third largest expense categories, behind utilities and repairs/maintenance. Building owners and managers were also able to make modest cuts in security and roads/grounds expenses (a $0.03 decrease in each category), though these categories are small relative to others.
These findings are based on an examination of a specialized control sample of more than 2,000 private sector buildings representing 385 million rentable square feet of U.S. office space that submitted both 2011 and 2012 expense data to the EER database. The sample only includes buildings meeting certain criteria in order to control for the impact of major renovations and changes in occupancy on operating expenses to ensure trends captured are representative of market reality. A complete analysis can be found in the latest issue of The BOMA Magazine.
With detailed income and expense information from more than 5,300 buildings across more than 250 markets, BOMA International’s Experience Exchange Report (EER) is commercial real estate’s premier income and expense benchmarking tool with the largest and most accurate data available in the industry. The EER allows users to conduct multi-year analysis of single markets and select multiple cities to generate state and regional reports. It also offers the capability to search by market, submarket, building size, building type and more for broader analysis. The 2013 Experience Exchange Report is available now at www.bomaeer.com.
About BOMA International
The Building Owners and Managers Association (BOMA) International is a federation of 93 BOMA U.S. associations, BOMA Canada and its 11 regional associations and 13 BOMA international affiliates. Founded in 1907, BOMA represents the owners and managers of all commercial property types, including nearly 10 billion square feet of U.S. office space that supports 3.7 million jobs and contributes $205 billion to the U.S. GDP. Its mission is to advance the interests of the entire commercial real estate industry through advocacy, education, research, standards and information. Find BOMA online at www.boma.org.
About Kingsley Associates
The most successful firms in real estate rely on Kingsley Associates for cutting-edge business intelligence solutions. With a depth and breadth of insight unmatched in the industry, Kingsley Associates brings thought leadership and passionate client service to every engagement. Kingsley Associates is a leader in tenant satisfaction surveys, resident satisfaction surveys, client perception studies, strategic consulting and operations benchmarking. To learn more, please visit our website at www.kingsleyassociates.com or our blog at www.kingsleyinsight.com.
Related Stories
Market Data | Jul 21, 2022
Architecture Billings Index continues to stabilize but remains healthy
Architecture firms reported increasing demand for design services in June, according to a new report today from The American Institute of Architects (AIA).
Market Data | Jul 21, 2022
Despite deteriorating economic conditions, nonresidential construction spending projected to increase through 2023
Construction spending on buildings is projected to increase just over nine percent this year and another six percent in 2023, according to a new report from the American Institute of Architects (AIA).
Mixed-Use | Jul 21, 2022
Former Los Angeles Macy’s store converted to mixed-use commercial space
Work to convert the former Westside Pavilion Macy's department store in West Los Angeles to a mixed-use commercial campus recently completed.
Building Team | Jul 20, 2022
San Francisco overtakes Tokyo as the world’s most expensive city for construction
San Francisco has overtaken Tokyo as the world’s most expensive city for construction, according to a new report from Turner & Townsend.
Libraries | Jul 20, 2022
Canada to open one of the world’s largest library and archive facilities
When it opens in 2026, Ādisōke is expected to be one of the largest library and archive facilities in the world.
Energy-Efficient Design | Jul 19, 2022
All is not lost: 3 ways architects can respond to the Supreme Court’s EPA ruling
The U.S. Supreme Court’s ruling to limit the Environmental Protection Agency’s power to regulate greenhouse gas (GHG) emissions from power plants dealt a significant blow to our ability to fight the climate crisis with federal policy.
Women in Design+Construction | Jul 18, 2022
Registration is open for BD+C's 2022 Women in Design+Construction Conference
Join your AEC industry peers in Chicago, September 26-28, 2022, for the 7th annual Women in Design+Construction Conference, hosted by the BD+C editorial team and the 35-person WIDC Advisory Board.
Airports | Jul 18, 2022
FAA will award nearly $1 billion for airport projects
The Federal Aviation Administration (FAA) will award nearly $1 billion to 85 airports of all sizes across the country to improve terminals.
Building Team | Jul 18, 2022
Understanding the growing design-build market
FMI’s new analysis of the design-build market forecast for the next fives years shows that this delivery method will continue to grow, despite challenges from the COVID-19 pandemic.
Mixed-Use | Jul 18, 2022
Mixed-use development outside Prague uses a material made from leftover bricks
Outside Prague, the Sugar Factory, a mixed-used residential development with public space, marks the largest project to use the sustainable material Rebetong.
