New Income and Expense Data for Conventional Rental Apartments Reported in Just-Released IREM Benchmarking Study

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Study Also Includes Key Performance Trends Over Four Years

Editor’s Note: Review copies and graphs and charts available to media on request; contact Sharon Peters (312-329-6067), speters@irem.org.  For major metropolitan area and regional breakout information, contact Matt O’Hara (312-329-6025), mohara@irem.org.

General Information

2013 Income/Expense Analysis: Conventional Apartments, Institute of Real Estate Management, 240 pages, soft cover, charts/graphs; IREM Member price is $234.95 and non-member price is $469.95 (plus shipping and tax). In addition to the traditional printed format, the new 2013 Edition is available for purchase online at www.irem.orgThe data is easily downloadable in both Excel and PDF file formats, and is completely customizable in Excel. As a special incentive, purchasers of the report in print format can also receive it in downloadable Excel file and PDF format for just an additional $99.99.

(Chicago, Aug. 22, 2013) –Gross possible rents for the four conventional rental apartment types examined (elevator; low-rise with 12 to 24 units; low-rise with 25-plus units; and garden) rose within a range of 1.6 percent and 4.0 percent in 2012 versus 2011. Total expenses for all four building types experienced year-to-increases ranging from 2.5 to 6.2 percent.
 
These key findings, reported in the 2013 edition of the Income/Expense Analysis: Conventional Apartments, published by the Institute of Real Estate Management (IREM), are drawn from a control sample of conventional apartments that have submitted data for the report consistently over the past four years. The report also contains data drawn from a larger sample of submissions gathered over the past five years, regardless of whether that data was submitted consecutively over the five-year period. In terms of sample size, the report analyzes the previous year’s operating income and cost figures for 3,423 multi-family rental properties representing over 683,000 units across the United States and Canada.

Income/Expense Analysis: Conventional Apartments, is designed to help real estate professionals evaluate multi-family development and investment options and compare their buildings’ performance to industry norms. The publication also is an invaluable resource to build better budgets; identify ways to trim waste, address inefficiencies, and make needed improvements; prepare feasibility studies, appraisals and loan requests; and much more.

OTHER FINDINGS DRAWN FROM THE FOUR-YEAR CONTROL SAMPLE*

  • NOI for elevator buildings increased 12.3 percent to $9.92 per square foot; NOI for garden apartments rose 4.2 percent to $5.16 per square foot; NOI for low-rise buildings with 25 or more units rose 1.5 percent to $4.89 per square foot; and NOI for low-rise buildings with 12-24 units declined 4.9 percent to $5.07 per square foot.
  • Looking at gross possible rents, low-rise buildings with 25-plus units reported the highest increase, 4.0 percent, raising the rent per square foot to $10.47. Low-rise buildings with 12 to 24 units reported a  rent increase of 3.1 percent to $11.79 per square foot; elevator buildings reported a 2.6 percent rent increase to $16.83 per square foot; and garden buildings reported a 1.6 percent gain to $10.57 per square foot.
  • In terms of expenses, all four building types analyzed were more costly to operate in 2012. Elevator building expenses rose 2.5 percent to $7.90 per square foot; low-rise buildings with 12-24 units rose 3.5 percent to $5.66 per square foot; low-rise buildings with 25 or more units reported a 6.2 percent increase to $5.33 per square foot; and garden buildings rose 3.6 percent to $5.17 per square foot.
  • Looking at utility costs reported for three of the four building types, elevator buildings remained the most costly, despite a 14.3 percent decline in 2012 to $1.08 per square foot.  Garden buildings saw a cost rise of 7.0 percent, increasing to $0.76 per square foot, and low-rise buildings with 25-plus units saw a cost increase of 6.6 percent, rising to $0.81 per square foot.
  • An analysis of maintenance and repair costs shows that low-rise buildings with 12-24 units were the costliest, rising 5.3 percent to $0.99 per square foot. Those for low-rise buildings with 25 or more units increased 10.5 percent to $0.42 per square foot; those for garden buildings rose 10.7 percent to $0.31 per square foot; and those for elevator buildings experienced no year-to-year change, remaining at $0.60 per square foot.
  • In terms of operating ratios, less than 52 percent of a typical property’s annual collections were used to cover operating expenses. All four building types remained relatively stable with low-rise buildings with 25 or more units experiencing the highest operating ratio at 51.9 percent, factoring in a 1.1 percent increase from the prior year. Elevator building reported the lowest operating ratio at 44.9 percent, representing a 1.5 percent decline from 2011.

*Data from buildings that have submitted report data consistently for the past four years.

SOME KEY FINDINGS DRAWN FROM THE LARGER SAMPLE

  • Uncollected income due to vacancy and other forms of rent loss decreased slightly for all four building types. At 6.3 percent, garden buildings have the highest vacancy and rent loss as a percentage of gross possible income followed by low-rise building with 25-plus units at 5.5 percent; low-rise buildings with 12-24 unit at 4.5 percent; and elevator buildings at 4.1 percent. 
  • An analysis of tenant turnover indicates that low-rise buildings with 12-24 units experienced the lowest turnover ratio at 36.7 percent, down 0.6 percent from the prior year.  Low-rise buildings with 25 or more units reported a turnover ratio of 46.0 percent, a year-to-year gain of 0.9 percent and elevator buildings reported a 39.5 percent turnover radio, a 0.3 percent decrease from the prior year. Garden buildings experienced the highest turnover ratio at 52.0 percent, factoring in a 0.1 percent year-to-year gain.

MORE STUDY SPECIFICS

The IREM Income/Expense Analysis research study summarizes data by building type, age, Section 42 properties, turnover and more. The income and expense data for each sample is presented in dollars per square foot of rentable area and as a percentage of gross possible income and dollars per unit.  Individual metro market reports for more than 150 cities also are included along with an analysis of vacancy rates and operating unit trends plus a variety of historical trend reports.

COMPANION PRODUCT TRACKS DATA OVER 10-PLUS YEARS
A new state-of-the-art product called the Income/Expense Analysis Online Lab is available as a companion product for the research study. The Lab is an interactive website with 24/7 access that  enables purchasers to download over 10 years of historical conventional apartment building data  – including over 100 customizable line-item variables – and compare it to the operating data in their individual portfolios. 

PRICING
The 240-page Income/Expense Analysis: Conventional Apartments report is available to IREM Members and non-members for $234.95 and $469.95, respectively, plus shipping and applicable state sales tax. Internet users can order the study in soft cover or in a downloadable format by accessing the Publications section (click on Income/Expense Analysis Reports on the drop-down menu) of the IREM web site at www.irem.org. As a special incentive, purchasers of the print report also can receive it in downloadable Excel file and PDF format for just $99.99, with the data completely customizable in Excel.

The companion Online Lab is priced at $324.95 for IREM Members and $649.95 for non-members.  For information on corporate discounts available for multiple users of the product in a given firm, contact Matthew O’Hara at mohara@irem.org, or phone 1-800-837-0706, ext. 6025. 

ORDERING INFORMATION
To order any of the  Income/Expense Analysis: Conventional Apartments’ products, contact the IREM Customer Service Department at 430 N. Michigan Ave., Chicago, IL 60611-4090 or call toll-free to (800) 837-0706, ext. 4650. Credit card orders (VISA, MasterCard, Discover or American Express) can be faxed toll-free to (800) 338-4736 or e-mailed to getinfo@irem.org

FOUR OTHER 2013 I/E ANALYSIS STUDIES AND COMPANION LABS AVAILABLE
IREM also has just published new 2013 editions of four other annual Income/Expense Analysis studies, each of which has a companion Lab. The categories covered: Office Buildings; Shopping Centers; Condominiums, Cooperatives & Planned Unit Developments; and Federally Assisted Apartments. Pricing and other information is available in the Publications section (click on Income/Expense Analysis Reports on the drop-down menu) of the IREM Web site at www.irem.org

ABOUT THE INSTITUTE OF REAL ESTATE MANAGEMENT
The Institute of Real Estate Management (IREM) is an international community of real estate managers dedicated to ethical business practices, maximizing the value of investment real estate, and promoting superior management through education and information sharing. An affiliate of the National Association of REALTORS, IREM is the home for all industry professionals connected to real estate management – and the only organization serving both the multi-family and commercial sectors.

We believe that good management matters, and that well-managed properties pay dividends in terms of value and in the quality of life for residents, tenants and customers. We believe in professional ethics. We believe in the power of knowledge and the importance of sharing it.

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Since 1933, IREM has set the standard for best practices in real estate management. Today, IREM membership includes nearly 18,000 individuals and 560 corporate members. To learn more about the IREM and its chapter network, call (800) 837-0706, ext. 4650 (outside the U.S. call (312) 329-6000) or visit www.irem.org.