BOMA report contains income/expense data

Real Estate Weekly, Sept 1, 1993

Total operating expenses in U.S. office buildings increased 1.1 percent in 1992 from $8.30 per square foot in 1991 to $8.39 per square foot in 1992, according to the Building Owners and Managers Association (BOMA) International's newly-released 1993 Experience Exchange Report: Operating a Cost Effective Office Building. At the same time, net operating income (total income less total expenses) rose by 0.5 percent -- an increase of $0.04 per square foot on average from $7.51 in 1991 to $7.55 per square foot in 1992. These figures are based on the two-year control sample of properties.

"Building owners and managers continue to experience setbacks in net operating income, " stated Thomas B. McChesney, president of BOMA International. "The challenge comes in providing high-quality tenant services while trying to hold down higher operating

Fixed expenses, notably property taxes and insurance, constituted the largest portion of expenses in 1992 (32 percent). Utility expenses, which were almost all energy-related, accounted for 22 percent of all expenses, followed by repairs/maintenance (16 percent); cleaning (13 percent); administrative (11) percent); and roads/grounds/security (6 percent).

An average corporate facility manager spent $1.87 per square foot more last year to maintain their office space than the typical property manager. Based on the new "Corporate Facilities" special study of the 1993 Experience Exchange Report, it costs $10.94 per square foot to operate downtown corporate facilities, compared to $9.01 per square foot to operate general office space. In the suburban market, the comparative figures were $8.83 versus $7 per square foot per year. The cost discrepancy was mainly caused by substantial increased spending on repairs/maintenance ($0.72 per square foot more) and utilities ($0.44 per square foot more).

BOMA International's " 1993 Experience Exchange Report (EER)" includes income and expense data for over 4,000 office buildings located throughout North America: 3,562 U.S. private sector properties, 291 government office buildings in the U.S., 199 privately held Canadian properties and 413 government buildings in Canada. In total, the EER is one of the most extensive databases within the commercial real estate industry covering over 750 million square feet office space in North America.