The Building Owners and Managers Association (BOMA) International, in collaboration with research firm Kingsley Associates, has released its 2017 Office Experience Exchange Report (Office EER) and 2017 Industrial Experience Exchange Report (Industrial EER). The Office EER offers more benchmarking information than any other comparable industry source, and the Industrial EER stands as the only existing benchmarking source in its sector.
Office Facilities EER
According to two-year trend data of identical office properties between calendar years 2015 and 2016, total income in the office sector increased from $28.93 per square foot (psf) to $30.60 psf, while total operating expenses increased from $8.20 psf to $8.26 psf. In addition, real estate taxes went up 7.9% year over year from $4.83 psf to $5.21 psf.
While total operating expenses increased by 0.7%, not all expenses increased at the same rate — and some remained flat or decreased. The chart below compares a number of operating expense line items over the two-year period:
U.S. Private-Sector Office Building Occupancy Figures:
- The average occupancy rate decreased by 1.1 percent, from 90.12 percent in 2015 to 89.10 percent in 2016.
- Square footage per office tenant increased by 0.5 percent, from 12,888.27 in 2015 to 12,954.97 in 2016.
U.S. Private-Sector Office Building Income Figures:
- Total rental income increased by 3.8 percent, from $27.33 psf in 2015 to $28.38 psf in 2016.
- Base rent increased 2.4 percent, from $23.67 psf in 2015 to $24.24 psf in 2016.
U.S. Private-Sector Office Building Expense Figures:
- Contract cleaning increased by 0.9 percent, from $1.14 psf in 2015 to $1.15 psf in 2016.
- Total electricity expense went down 10.1 percent, from $1.88 psf in 2015 to $1.69 psf in 2016.
- General administrative office expenses decreased by 61.5 percent, from $0.52 psf in 2015 to $0.20 psf in 2016.
- Insurance remained consistent at $0.36 psf in 2015 and 2016.
For industrial properties, the results of two-year trend data analysis show that total rental income per square foot increased from $5.61 to $6.12. In addition, total industrial revenue significantly increased from $5.81 psf to $10.26 psf, which is a 76.6% jump. This change may be due, in part notes BOMA, to the increase in base rent, which went from $4.46 psf in 2015 to $4.85 psf in 2016 — an 8.7% jump itself. Total operating expenses increased by 4.9%, from $1.42 psf in 2015 to $1.49 psf in 2016.
Industrial Facilities EER
As in the office sector, specific expenses in the industrial sector also fluctuated by line item. Further changes in operating expenses can be seen in the chart below:
U.S. Private-Sector Industrial Building Occupancy Figures:
- The average occupancy rate increased by 1.4%, from 96.76% in 2015 to 98.12% in 2016.
- Square footage per tenant increased 2.2%, from 70,711.40 in 2015 to 72,301.68 in 2016.
U.S. Private-Sector Industrial Building Expense Figures:
- Exterior building maintenance remained constant at $0.14 psf in both 2015 and 2016.
- Energy expense decreased 14.3%, from $0.07 psf in 2015 to $0.06 psf in 2016.
- Real estate taxes increased by 5.7%, from $0.87 psf in 2015 to $0.92 psf in 2016.
- Insurance remained the same at $0.09 psf in 2015 and in 2016.
Both the Office EER and Industrial EER consist entirely of voluntarily reported data from office and industrial property owners and managers. The Office EEAR contains information from thousands of buildings across hundreds of markets in the U.S. and Canada. The Industrial EER, now in its third year, remains the only benchmarking resource in the industry specifically tailored to the industrial sector. The 2017 Industrial EER offers industrial sector data from thousands of buildings across the United States.
The interactive online databases allow users to generate customized reports using a host of search filters, including building size, type, class, market, submarket and more. Reports are downloadable as both Excel and PDF documents, and a subscription grants unlimited access; there is no limit to the number of reports users can generate.
For more information and to subscribe to the 2017 Office EER and 2017 Industrial EER, visit eer.boma.org.