Relative Stability in Total Collections, Operating Income and Operating
Costs, But Double-Digit Rise in Insurance Costs

Editor's Note: Review copies available to media on request; contact Sharon Peters (312.329.6067), speters@irem.org. For regional breakout information, contact Matt O'Hara (312.329.6025), mohara@irem.org.

General Information
2004 Income/Expense Analysis^®: Office Buildings, Institute of Real Estate Management, 304 pages, soft cover, charts/graphs, $349.95 (plus $13.25 shipping and applicable state sales tax); $174.98 IREM Members. In addition to the traditional printed format, the new 2004 Edition is available online at www.irem.org. The data is easily downloadable in both Excel and PDF file formats, and is completely customizable in Excel.

(Chicago, IL, Aug. 23, 2004) - National occupancy levels for both suburban and downtown office properties rose slightly in 2003 to 95 percent, a gain of 2 percent for downtown properties and 1 percent for suburban properties. Rental rates, overall operating costs and net operating income remained relatively stable across the sector last year as did overall operating costs, with but one exception: Insurance costs rose in double digits for all office properties.

These are among the key findings reported in the 2004 edition of the Income/Expense Analysis^®: Office Buildings, a new benchmarking study published by the Institute of Real Estate Management (IREM^®). This annual research study, conducted by IREM^® since 1976, analyzes operating income and costs for more than 3,000 private-sector buildings. It is designed to help property owners, managers, investors, appraisers, lenders, developers and other real estate professionals evaluate their buildings' performance and prepare budget and revenue projections, feasibility studies, etc.

SUBURBAN COLLECTIONS DIP, DOWNTOWN COLLECTIONS RISE SLIGHTLY
During 2003, total collections for suburban office complexes nationwide decreased 3.8 percent from 2002 levels to $18.20 per square foot of net rentable area, whereas downtown properties increased 3 percent to $19.18 per square foot. Total actual collections by downtown properties were 5.4 percent more last year than their suburban counterparts.

SUBURBAN OPERATING COSTS DOWN SLIGHTLY, DOWNTOWN COSTS UP
Total operating costs for suburban buildings in 2003 declined 2.2 percent from the prior year to $7.62 per square foot, while operating costs for downtown properties increased 5.1 percent to $8.84 per square foot of rentable area.

Nationally, net operating costs for suburban buildings decreased 1.8 percent to $5.51 per square foot in 2003 as compared to 2002, whereas net operating costs for downtown properties rose 2.9 percent to $6.30 per square foot.

KEY EXPENSE COMPARISONS
Except for insurance costs, which rose 10.2 percent, all major expense categories for suburban properties declined slightly from the prior year. Administrative/benefits costs were 6.2 percent lower, janitorial/maintenance costs declined 3 percent, real estate and other taxes were 2.8 percent lower, and utility costs declined 1.2 percent.

In contrast, buildings in downtown markets experienced generally minor increases in all expense categories except for insurance, which rose 16.8 percent from the prior year, and real estate and other taxes which were 8.7 percent higher than in 2002. Administrative/benefits costs increased 2.7 percent, janitorial/maintenance costs rose 1.7 percent and utility costs increased just 1.1 percent from the prior year.

Focusing again on major expense categories, but as a percentage of total operating costs, the IREM^® study reveals that suburban properties spent 25.3 percent of their operating budget on janitorial/maintenance services, 23 percent on real estate and other taxes, 22.3 percent on utility costs, 14.2 percent on insurance/services and 13.9 percent on administrative/benefits. Similarly, expenditures for janitorial/maintenance services accounted for the largest chunk of downtown property' operating budgets, 27.3 percent, followed by 24 percent spent on real estate and other taxes, 20 percent spent on utilities, 14.1 percent spent on insurance/services, and 12.9 percent spent on administrative/benefits.

Overall, suburban properties proved 13.8 percent less costly to operate in 2003 than their downtown counterparts, as all expense categories for suburban properties were less than those experienced by downtown buildings.

MEDIAN OPERATING RATIOS
Though downtown properties reported higher total actual collections than suburban properties, the overall operating experience of both downtown and suburban office markets were similar as indicated by their median operating ratio (net operating costs divided by total actual collections). The median operating ratio at suburban properties was 0.41 while the operating ratio at downtown properties was 0.44.

STUDY EXAMINES 50 SPECIFIC CATEGORIES
The IREM^® Income/Expense Analysis^® research study contains detailed analyses of office building operating revenues and expenses for major metropolitan areas and suburban markets in both the United States and Canada . The income and expense data is presented in dollars per square foot for more than 50 specific categories broken out by building size, height and rental range.

PRICE AND ORDERING INFORMATION
The 304-page Income/Expense Analysis^®: Office Buildings is available for $349.95 (plus $13.25 shipping and applicable state sales tax). The IREM member price is $174.98. To order, 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 custserv@irem.org. Internet users can order the study in soft cover or in a downloadable format by accessing the IREM website at www.irem.org.

FOUR OTHER 2004 I/E ANALYSIS BENCHMARKING STUDIES AVAILABLE
IREM^® also has just published new 2004 editions of its four other annual Income/Expense Analysis^® studies: Shopping Centers ($349.95); Condominiums, Cooperatives & Planned Unit Developments ($304.95); Conventional Apartments ($349.95); and Federally Assisted Apartments ($304.95). IREM members receive a 50 percent discount on each study and member and non-member purchasers of all five studies receive a 15 percent discount on their total order.

ABOUT THE INSTITUTE OF REAL ESTATE MANAGEMENT
The Institute of Real Estate Management (IREM^®) has been the source for education, resources, information and membership for real estate management professionals for more than 70 years. An affiliate of the NATIONAL ASSOCIATION OF REALTORS^®, IREM is the only professional real estate management association serving both the multi-family and commercial real estate sectors. With 82 U.S. chapters, seven international chapters, and several other partnerships around the globe, IREM is an international organization that serves as an advocate on issues affecting the real estate management industry.

Membership includes nearly 16,000 individual members and 530 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, and the Accredited Management Organization^® (AMO^®) accreditation. These esteemed designations certify competence and professionalism for those engaged in real estate management. In addition, IREM offers Associate membership status.

To learn more about the Institute of Real Estate Management, call (800) 837-0706, Ext. 4650 (outside the U.S. call (312) 329-6000) or visit www.irem.org.