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IREM Study Finds Revenue, Operating Costs are Up for Office Space
Total collections for suburban office complexes nationwide in 2005 increased 3.3 percent from 2004 levels to $18.95 per square foot of net rentable area, whereas downtown properties increased 4.5 percent to $19.33 per square foot, according to a new survey by the Institute of Real Estate Management (IREM).
In the 2006 edition of the Income/Expense Analysis: Office Buildings, it was found that total operating costs for suburban buildings in 2005 rose 4.8 percent from the prior year to $8.02 per square foot, while operating costs for downtown properties rose 2.0 percent to $9.00 per square foot of rentable area.
Nationally, net operating costs for suburban buildings increased 5.2 percent to $5.85 per square foot in 2005 as compared to 2004, whereas net operating costs for downtown properties rose 6.2 percent to $6.71 per square foot.
Except for insurance costs, which dipped 0.9 percent, all major expense categories for suburban properties increased somewhat from the prior year, according to IREM, with janitorial/maintenance costs the largest with 5.7 percent over last year. Similarly, buildings in downtown markets saw a rise in each major expense category except for insurance costs, with utility costs the most increased at 12 percent over last year.
The annual research study conducted by IREM since 1976 analyzes operating income and costs for nearly 2,500 private-sector buildings across the United States and is designed to evaluate building performance.