Rents and Expenses Increase for Most Conventional Rental Building Types

09/18/2009 |

A new benchmarking study published by the Institute of Real Estate Management (IREM) found that total expenses for all types of conventional rental apartments (garden; low-rise, 12-to-24 unit; low-rise, 25-plus units; and elevator) increased slightly in 2008 from the prior year. Additionally, net operating income across the conventional rental apartment spectrum saw minor gains or dips for all but one building, while uncollected income due to vacancy and other forms of rent loss declined less than 1.0 percent from 2007.

The annual study, titled the Income/Expense Analysis®: Conventional Apartments, analyzes the previous year’s operating income and cost figures for 3,067 multi-family rental properties representing over 670,000 units across the United States. Designed to help real estate professionals evaluate multi-family development and investment options and compare their buildings’ performance to industry norms, the study is also an invaluable resource when developing budgets, feasibility studies, appraisals, loan requests, and other documents.

The 2009 edition of IREM’s conventional apartment benchmarking study also found that of the four building types analyzed, NOI for elevator buildings last year declined 2.6 percent to $7.01 per square foot; NOI for low-rise buildings with 25-plus units increased 1.2 percent to $4.87 per square foot; and NOI for garden apartments increased only 0.04 percent to $4.91 per square foot. However, NOI for low-rise buildings with 12 to 24 units rose to $4.50 per square foot – an increase of 14.2 percent.

Additionally, the study found a very minor change up or down across all conventional apartment types in a comparison of vacancy and rent loss as a percentage of gross possible income, while owners of all four building types analyzed found their buildings slightly more expensive to operate in 2008 than in 2007. The lowest vacancy and rent loss level in the U.S. was in Seattle, where median vacancy and rent loss of 4.8 percent or less of gross income was reported for all four building types.

Utility costs were only reported for three of the four building types, with two showing double-digit increases from the prior year and one showing a very slight decline. And, while operating ratios remained relatively stable, gross possible apartment rents reported for 2008 for all four building types rose slightly from the previous year. Low-rise buildings with 25 or more units showed a rent increase of 1.9 percent to $9.97 per square foot; elevator buildings’ rents increased 1.5 percent to $14.03 per square foot; rent in garden buildings rose only 0.9 percent to $10.13 per square foot; and low-rise buildings with 12 to 24 units reported the largest increase in rent – 3.4 percent, raising the rent to $10.22 per square foot.

The full, 218-page version of the Income/Expense Analysis®: Conventional Apartments is available for $419.95 (plus shipping and applicable sales tax) for non-IREM members or for $209.05 (plus shipping and sales tax) for IREM members. It can be ordered by contacting IREM’s customer service department at (800) 837-0706 x. 4650 or at It can also be viewed on the Web by accessing the Publication section of the IREM website at

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