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Study Also Looks at Co-op and PUD Performance

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
2008 Income/Expense Analysis®: Office Buildings, Institute of Real Estate Management, 274 pages, soft cover, charts/graphs, 404.95 (plus $15.50 shipping and applicable state sales tax); IREM Members $202.95 (plus shipping and handling).  In addition to the traditional printed format, the new 2008 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, Sept. 30, 2008) Median total operating expenses for all condominium property types as a group rose 14.5 percent in 2007 to $2,342.90 per unit from $2,045.88 per unit in 2006. Similarly, condominium dwellers as a group paid 14.2 percent more in assessments last year, with the median monthly assessment amounting to $228.80 per unit, compared with $200.42 in 2006.

These are among the key findings reported in the 2008 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 income and cost figures for more than 1,695 properties in the United States representing 247,921 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 evaluate budgets.

BREAKOUT DATA – OPERATING EXPENSES AND ASSESSMENTS
Breaking out operating expenses by condominium type, costs for low-rise properties increased 18.4 percent to $2,348.98 per unit; those for townhouses rose 7.8 percent to $1,761.72 per unit; and those for high-rise properties rose a mere 0.5  percent  per unit  in 2007 from the prior year to $3,714.07 per unit.

A break out of median monthly assessments by condominium type shows that those for low-rise properties rose 18.2 percent to $226.94, those for townhouses rose 7.9 percent to $176.89, and those for high-rise properties dipped by 0.2 percent.

MAINTENANCE, OTHER 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, increased  8.2 percent to $811.96 per unit in 2007 from the previous year.  Fixed expenses increased 26.4 percent to $406.65 per unit, operating expenses increased 7.3 percent to $595.92 per unit, and per-unit administrative expenses increased 6.7 percent to $274.79.

The typical condominium association added $402.75 per unit to their reserve fund last year for future replacements and capital reserves.  This represents 17.2 percent of total operating expenses
Contributions to replacement reserves as a percent of total operating expenses for high-rise developments were below the national median; however, the $546.22 added to reserves represented 14.7 percent of total operating expenses.

Townhouse developments added reserves of $360.94 per unit, amounting to 20.5 percent of total operating expenses; and low-rise properties added reserves of $374.26 per unit, amounting to 15.9 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 being water (64 percent); access to a swimming pool (56 percent); garage parking spaces (48 percent); recreational buildings (32  percent); and tennis courts (18 percent). Thirteen percent of the buildings provided electricity; 12 percent provided gas; 11 percent provided Jacuzzis; 8.0 percent provided saunas; 8.0 percent provided hot water; and 4.0 percent provided heating fuel.

PUD OPERATING EXPENSES AND ASSESSMENTS INCREASE
Planned Unit Developments, or PUDS, for all types combined (low-rise, townhouse and combination), reported total expenses for 2007 of $557.43 per unit per year, a gain of 19.2 percent from $467.49 in 2006. A breakdown of expenses shows that fixed expenses were up 29.7 percent from the prior year; repair and maintenance costs, which account for the largest portion of total operating costs,  were up 20.3 percent;  administrative  expenses rose 17 percent; and operating expense dipped 1.1 percent.

The typical PUD added $64.76 per unit per year to its reserve fund for future replacements and capital reserves, amounting to 11.6 percent of total operating expenses. Median monthly assessments (total operating expenses and replacement reserves) last year for all PUDS combined amounted to $51.85 per unit, increasing 15.7 percent from the year earlier.  PUDs remained the most affordable type of association-operated housing.

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 248-page Expense Analysis®: Cooperatives, Condominiums and Planned Unit Developments is available for $359.95 (plus $15.50 shipping and applicable state sales tax).  IREM member price is $179.95 (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 custserv@irem.org. Internet users can order the study in soft cover or in a downloadable format by accessing the Publications section of the IREM website at www.irem.org.
 
FOUR OTHER 2008 I/E ANALYSIS BENCHMARKING STUDIES AVAILABLE
IREM® also has just published new 2008 editions of its four other annual Income/Expense Analysis® studies: Shopping Centers ($404.95); Conventional Apartments ($404.95); Office Buildings ($404.95); and Federally Assisted Apartments ($359.95). 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.

ABOUT THE INSTITUTE OF REAL ESTATE MANAGEMENT
The Institute of Real Estate Management (IREM®) is celebrating its 75th anniversary in 2008.  Major sponsors of the year-long celebration areYardi Systems, a leading provider of high-performance software solutions for the real estate industry, and the REALTORS® Commercial Alliance (RCA), the collective commercial constituency within the National Association of REALTORS®.

For more than seven decades, IREM has been the source for education, resources, information, and membership for real estate management professionals. 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 80 U.S. chapters, eight international chapters, and several other partnerships around the globe, IREM is an international organization that also serves as an advocate on issues affecting the real estate management industry.

Membership includes more than 18,000 individual members and 500 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 certification, and the Accredited Management Organization^® (AMO^®) accreditation. These esteemed credentials certify competence and professionalism for those engaged in real estate management. In addition, IREM offers Associate, Student and Academic memberships.

Collectively, IREM CPM® Members in the United States manage over $1.5 trillion in real estate assets, including 8.4 million residential units and 8.4 billion net square feet of commercial space. An additional 977,400 residential units are managed by IREM ARM® Members. IREM Members are employed by some of the most prestigious real estate firms in the world and nearly 70% hold upper-level management positions. Due to their professionalism and vast experience, property owners and investors worldwide continually seek out the management services of IREM Members.

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