New IREM Study Reports Higher Operating Expenses and Assessments for All Condominium Types as a Group
Study Also Looks at Co-op and PUD Performance
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(CHICAGO, IL, Oct. 19, 2010) Median total operating expenses for all condominium building types as a group rose 7.5 percent in 2009 to $2,569.97 per unit from $2,390.89 per unit in 2008. Similarly, condominium dwellers as a group paid 7.5 percent more in assessments last year, with the median monthly assessment amounting to $255.33 per unit, compared with $235.70 in 2008.
These are among the key findings reported in the 2010 edition of the Expense Analysis: Condominiums, Cooperatives and Planned Unit Developments, a new benchmarking study published by the Institute of Real Estate Management (IREM). Conducted by IREM since 1978, this annual study analyzes the previous year’s operating cost figures for more than 1,700 properties in the United States and Canada representing 232,979 units. It is designed to help condominium, co-op and planned unit development (PUD) boards and property managers benchmark their association’s financial condition, calculate assessments and necessary replacement reserves, and develop and evaluate budgets.
BREAKOUT DATA – OPERATING EXPENSES AND ASSESSMENTS
Breaking out per-unit operating expenses by condominium type, those for high-rise properties increased the most, 10.2 percent, rising to $4,295.85; those for townhouses rose 5.5 percent to $1,889.62; those for combination properties rose 2.1 percent to $2,331.37; and those for low-rise properties rose a mere 1.5 percent to $2,418.56
Similarly, a break out of median monthly assessments by condominium type shows, again, that high-rise properties experienced the biggest increase, 13 percent, rising to $421.01. The other building types saw single-digit assessment increases with those for low rise properties increasing 3.7 percent to $239.10; those for townhouses rising 2.4 percent to $185.66; and those for combination properties rising 0.4 percent to $228.30.
COSTS RISE; REPLACEMENT RESERVES GROW
Repair and maintenance costs for all condominium types as a group, which historically account for the largest portion of total operating costs, decreased 3.4 percent to $809.93 per unit in 2009 from the previous year. Operating expenses increased 5.2 percent to $648.71 per unit and per-unit administrative expenses increased 9.5 percent to $331.63.
The typical condominium association added $470.02 per unit to its reserve fund last year for future replacements and capital reserves. This represents 18.3 percent of total operating expenses
Breaking out reserves by building type, townhouse developments added reserves of $338.35 per unit, amounting to 17.9 percent of total operating expenses; low-rise properties added reserves of $450.64 per unit, equal to 18.6 percent of total operating expenses; high-rise properties added reserves of $756.25 per unit, or 17.6 percent of total operating expenses; and combination properties added reserves of $408.17, equal to 17.5 percent of total operating expenses.
WATER AND SWIMMING POOL ACCESS MOST COMMON AMENITIES
Condominium associations continued to furnish a number of amenities and utilities to individual units. The most prevalent was water (65 percent), followed by garage parking spaces (52 percent); access to a swimming pool (51 percent); recreational buildings (29 percent); electricity (22 percent); tennis courts (14 percent); hot water (13 percent); gas (12 percent); Jacuzzis (11 percent); saunas (7 percent); and heating fuel (4.0 percent).
PUD OPERATING EXPENSES UP AND DOWN; ASSESSMENTS STABLE
Planned Unit Developments, or PUDS, for all types combined (low-rise, townhouse and combination), reported total expenses for 2009 of $572.28 per unit, up 0.1 percent from $571.80 in 2008. A breakdown of expenses shows that operating expenses increased 9.9 percent, and administrative expenses rose 5.5 percent. By comparison, fixed expenses declined 3.9 percent and repair and maintenance costs, which account for the largest portion of total operating costs, dipped 4.9 percent.
The typical PUD added $79.81 per unit to its reserve fund in 2009 for future replacements and capital reserves, equal to 13.9 percent of total operating expenses. Median monthly assessments (total operating expenses and replacement reserves) last year for all PUDS combined amounted to $54.34 per unit, increasing 0.4 percent from the year earlier.
Like condominium associations, PUDS also continued to provide a number of amenities and utilities to individual units. The most prevalent was access to a swimming pool (28 percent), followed by tennis courts (15 percent); water and recreational buildings (each 13 percent); electricity (11 percent); garage parking spaces (10 percent); and Jacuzzis (less than 5 percent). For the most part, PUD residents paid for utilities such as heating fuel, hot water and gas.
MORE STUDY SPECIFICS
The IREM Expense Analysis research study summarizes data by association type (condominiums, cooperatives and planned unit developments) and building type (high-rise, low-rise and townhouse). It provides an analysis of over 30 expense categories, hundreds of operating breakdowns, median monthly assessments and an amenity package analysis. Metropolitan and regional breakouts also are included.
PRICE AND ORDERING INFORMATION
The 300 page Expense Analysis: Cooperatives, Condominiums and Planned Unit Developments is available for $389.95 (plus $15.50 shipping and applicable state sales tax). IREM Member price is $194.95 (plus shipping and tax). To order, contact IREM’s 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 firstname.lastname@example.org. 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 www.irem.org.
FOUR OTHER 2010 I/E ANALYSIS BENCHMARKING STUDIES AVAILABLE
IREM also has just published new 2010 editions of its four other annual Income/Expense Analysis studies: Shopping Centers ($434.95); Conventional Apartments ($434.95); 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.
NEW ONLINE LAB TRACKS DATA AND TRENDS OVER 10 YEARS
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.
ABOUT THE INSTITUTE OF REAL ESTATE MANAGEMENT
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 www.irem.org.