BOMA International, in collaboration with Kingsley Associates, has released the 2012 Experience Exchange Report (EER). The report shows a number of findings, including a 2.5% increase in private sector base rent income, indicative of a possible sustained market recovery.
The EER examines the performance of more than 5,400 buildings, in 250 distinct markets, across 125 cities in The United States and Canada. The EER allows users to conduct multi-year analysis of single markets, and analysis of special use facilities such as medical office buildings, financial buildings, agency managed, corporate facilities, and all-electric buildings.
The presentation given at the 2012 Every Building Conference and Expo highlighted aspects of the report. Despite increases in operating and fixed expenses, with standard operating expenses up 1.3% in 2011 and operating plus fixed expenses up 4.2% in 2011, the private sector saw modest increases in rental and total income of 2.7% and 1.7%, respectively.
The EER findings also indicate that the number of square feet per office worker decreased 2.9% last year, from 315 square feet per person in 2010 to 306 square feet per person in 2011. The data is consistent with industry trends, as office space per worker declines as the market puts more value on mobile work options and open office floor plans.
Private-Sector Office Building Income Trends
Private Buildings in the U.S. saw a 2.5% increase in base rent from $21.61 per square foot (psf) in 2010 to $22.15 psf in 2011.
The average building’s rent abatements increased 14%, from $1.07 psf in 2010 to $1.22 psf in 2011.
Private-Sector Office Building Expense Trends
Amortized tenant improvement costs in Private Buildings saw a 10% increase, from $2.09 psf in 2010 to $2.30 psf in 2011, possibly indicating tenants moving into new space or current tenants improving existing space.
Repair and maintenance costs saw a 2.7% increase, from $1.87 psf in 2010 to $1.92 psf in 2011.
Utility costs declined for the third consecutive year as BOMA members continued to refine their asset management skills and eliminate unnecessary cost. Utilities decreased 2.5 percent, from $2.38 psf in 2010 to $2.32 psf in 2011.