Income levels are growing while expenses also continue to increase in U.S. office buildings, according to the results of a new study released by BOMA International and Kingsley Associates, a research firm. The 2015 Office Experience Exchange Report (Office EER) shows that while office building rental income grew by 5.2% from $27.19 per square foot to $28.63 per square foot, total operating expenses also increased by 6.1%, rising from $7.96 per square foot to $8.45 per square foot in 2014.
With the study’s data demonstrating that the office sector has posted a second straight year of significant income growth, the study’s authors argue that the industry has turned a corner since the Great Recession. The increase in expenses can be attributed to two factors: 1) a large (7.9%) jump in utility expenses over the past year and 2) FMs performing more maintenance and improvement projects that may have been put on hold during the economic downturn, with repairs and maintenance expenses rising by 6.2% from 2013 to 2014.
Additionally, office densification is continuing its rise to prominence with reported square feet per office worker dropping 1.5% in private-sector buildings from 2013 to 2014. Rising worker densities can increase costs and cause increased use and stress to key pieces of building infrastructure such as HVAC systems.