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Most Conventional Rental Building Types Saw Slight Expense Increases and Generally Slight Rent Increases in 2009, New IREM Benchmarking Study Reports

NOI Levels Dip and Vacancy/Rent Loss Levels Increase

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(CHICAGO, IL, Oct. 15, 2010) Total expenses for all types of conventional rental apartments (garden; low-rise 12-to-24 units; low-rise, 25-plus units; and elevator) increased in low single digits in 2009 from the prior year.  In contrast, gross possible rents during the year for three of the four building types examined rose in low single digits, with the remaining building type experiencing an 8 percent rise.

These are among the key findings reported in the 2010 edition of the Income/Expense Analysis: Conventional Apartments, a new benchmarking study published by the Institute of Real Estate Management (IREM). This annual study by IREM analyzes the previous year’s operating income and cost figures for 2,930 multi-family rental properties representing over 615,000 units across the United States. It 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 grow and trim expenses; market a property more successfully; prepare feasibility studies, appraisals and loan requests; and much more.

NOI across the conventional rental spectrum decreased last year versus 2008, with elevator buildings dipping 1.4 percent to $7.22 per square foot; NOI for garden apartments decreasing 1.9 percent to $5.08 per square foot; NOI for low-rising buildings with 25-plus units declining 3.1 percent to $4.69 per square foot, and that for low-rise buildings with 12-to-24 units experiencing a 4.6 year-to-year decline, to $5.24 per square foot.

A 2009 vs. 2008 comparison of vacancy and rent loss as a percentage of gross possible income shows a minor increase – from 1.6 percent to 2.6 percent -- for all conventional apartment types. Differing economic conditions and levels of multi-family development experienced by each metropolitan area analyzed produced significant differences in vacancy and rent loss levels. The lowest vacancy and rent loss level in the U.S. was in Washington, DC, where a median vacancy and rent loss of 5.2 percent or less of gross income was reported for two of the three building types for which data was available.

Owners of all four building types analyzed found them just slightly more expensive to operate in 2009 than in 2008. Total expenses for garden apartments rose 2.5 percent to $5.26 per square foot; those for elevator buildings increased just 1.0 percent to $7.40 per square foot; those for low-rise buildings with 25-plus units rose 3.0 percent to $5.13 per square foot.; and those for low-rise buildings with 12–to-24 units rose 1.8 percent to $5.20 per square foot.

Looking at gross possible apartment rent specifics in 2009, all four building types examined saw rents rise slightly from the prior year.  Low-rise buildings with 12-to-24 units reported the largest increase, 8.0 percent, raising the rent per square foot to $11.35.  Rents in low-rise buildings with 25 or more units increased 1.9 percent to $10.22 per square foot; those for elevator buildings increased 1.6 percent to $14.26 per square foot; and those for garden buildings rose 3.6 percent, to $10.78 per square foot.

Rental rates for most building types in the Northeast and West Coast were higher than all other regions. Low-rise buildings with 12 to 24 units in the Plains region reported the lowest median rents at $7.73 per square foot, whereas elevator buildings in the Northeast reflected the highest gross possible rents at $19.17 per square foot.

Utility costs were reported for three of the four building types, with two showing single digit increases in 2009 from the prior year and one showing a slight decline.  Elevator buildings continue to have the highest utility costs, increasing 7.8 percent to $1.39 per square foot.  Low-rise buildings with 25-plus units saw a cost decline of 5.1 percent, falling to 75 cents per square foot, while garden buildings saw a cost increase of 1.4 percent, rising to 70 cents per square foot.

Maintenance and repair costs for two building types declined in 2009 vs. 2008, one by 6.7 percent and the other by 4.7 percent. The two remaining types saw per-square-foot increases of 3.2 percent and 5.3 percent, respectively.

For all building types in 2009, less than 53 percent of a typical property’s annual collections were used to cover operating costs, versus less than 54 percent in 2008. Operating ratios remained relatively stable, with low-rise buildings with 25-or-more units experiencing the largest change, a gain of 1.5 percent, rising to 52.7 percent.  Elevator buildings were the only building type to report a decrease, slipping 1.0 to 51 percent.  

Three of the four building types examined experienced an increase in tenant turnover in 2009 vs. the year earlier. Turnover for low rise buildings with 12-24 units increased 14.1 percent, rising to 52 percent; that for elevator buildings rose 3.6 percent to 42.6 percent; and that for garden buildings rose 1.4 percent to 54.3 percent.  In contrast, turnover in low rise buildings with 25-plus units declined 2.4 percent to 49.4 percent.  

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.

The 238-page Income/Expense Analysis: Conventional Apartments is available for $434.95 (plus $15.50 shipping and applicable state sales tax).  The IREM Member price is $217.95 (plus shipping and sales tax). To order, contact IREM’s Customer Service Department at 430 N. Michigan Ave., Chicago, IL 60611-4090 or call toll-free at (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  Internet users can order the study in soft cover or in a downloadable format by accessing the Publications section of the IREM Web site at

IREM also has just published new 2010 editions of its four other annual Income/Expense Analysis studies: Shopping Centers ($434.95); Condominiums, Cooperatives & Planned Unit Developments ($389.95); Office Buildings ($434.95); and Federally Assisted Apartments ($389.95). IREM Members receive a 50 percent discount on each study; member and non-member purchasers of all five studies receive a 15 percent discount on their total order.

A new, state -of-the-art companion product to each of IREM’s five property sector reports will debut shortly.  Called the Income/Expense Analysis Online Lab, an interactive Web site from IREM with unlimited access, the product enables users to download over 10 years of historical data, including over 100 customizable line-item variables, and compare it to the operating data in their portfolio. Specific benefits include being able to (1) make at-a-glance data comparisons by property type, year, line item, and/or location; (2) build and tweak budgets throughout the year; (3) confidently relay precise metrics and trending data to owners and investors.

The price of each Income/Expense Analysis Online Lab ranges from $292.95 to $324.95 for IREM Members and $584.95 to $649.95 for non-members, depending upon the applicable property sector. Purchasers of hard-copy or downloadable Income/Expense Analysis reports and Online Labs will receive a 20 percent discount on their total order.

The Institute of Real Estate Management (IREM) is an international community of real estate managers across all property types dedicated to ethical business practices and maximizing the value of investment real estate. An affiliate of the National Association of Realtors, IREM has been a trusted source for knowledge, advocacy and networking for the real estate management community for more than 80 years.

IREM is the only professional real estate management association serving both the multi-family and commercial real estate sectors and has 80 U.S. chapters, 14 international chapters, and several other partnerships around the globe. Worldwide membership includes nearly 18,000 individual members and over 535 corporate members.

IREM promotes ethical real estate management practices through its credentialed membership programs, including the Certified Property Manager (CPM) designation, the Accredited Residential Manager (ARM) certification, the Accredited Commercial Manager (ACoM) certification, and the Accredited Management Organization (AMO) accreditation. These esteemed credentials certify competence and professionalism for those engaged in real estate management. IREM also offers CPM Candidate, Associate, Student, and Academic memberships. All members are bound by the strictly enforced IREM Code of Professional Ethics.

Collectively, CPM Members in the United States manage nearly $2 trillion in real estate assets, including 11.4 million residential units and 10.4 billion net square feet of commercial space. 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