(Save the date: RealShare Chicago comes to the Union League Club of Chicago October 23.)
CHICAGO-The locally based Institute of Real Estate Management has released two commercial real estate-realted studies it compiles every year on the national apartment and office markets. Surveys from thousands of properties show some of the obvious, such as apartment rents have gone up while office rents have dropped, but also detail other leasing factors, such as expense break downs for each property type.
The apartment report, Income/Expense Analysis: Conventional Apartments, analyzes NOI and cost figures for 3,156 multifamily properties across the US and Canada in 2011. Results show that low-rise buildings, with only 12 to 24 units, had the highest rent increase of 8.3% to $11.98 per square foot, while low-rise buildings with 25 or more units had the only decrease of 1.5% to $10.07 per square foot. Garden and elevator complexes remained about the same. The report also shows the move back into higher rents and NOI after two slow years in 2009-10.
According to the survey results, Los Angeles and Phoenix had the highest high-rise vacancy rates last year, at 11.5% and 20.5%, respectively. But for the most part, NOI increased and vacancy dropped for all properties, with high-rise structures hitting 4.8% vacant. However, most apartments were more costly to operate in 2011, with high-rise buildings seeing the highest increase in utility, maintenance and repair costs.
Matt O’Hara with IREM tells GlobeSt.com that total rents for suburban office complexes decreased about 1.3% from 2010 levels to $18.22 per square foot in 2011, but downtown properties saw a 7.3% decline to $20.30 per square foot. The study Income/Expense Analysis: Office Buildings analyzed operating income and costs for 2,140 private-sector office complexes in the US and Canada, including 370 medical office buildings. “Suburban office was a little more stable last year,” O’Hara says.
Fortunately, expenses also went down for office properties. Total operating costs for suburban offices last year decreased slightly to $8.32 per square foot, with a drop of 1.9% to $9.95 per square foot for downtown properties. Suburban offices were mostly less costly to operate than downtown properties.
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