Condo, co-op and PUD operational trends demystified
Among the many Income/Expense Analysis reports IREM offers is a breakdown of the operating expenses of the complicated condominium, co-up and planned unit developments (PUD). All three of these property types are defined by shared attributes that include governance by associations, which are paid fees by residents to provide amenities that can include pools, gyms, parks, and the like.
In the most recent analysis, IREM collected data from 2,516 properties in the United States and Canada, representing 328,941 units. The typical condominium complex in our study contains 108 units, while the average cooperative includes 119 units, and PUDs contain an average of 150 units.
IREM’s study found three areas of results worth exploring in more detail – total operating expenses, the variation in these expenses, and replacement reserves.
Total operating expenses and variations
The median total operating expenses for all property types combined amounted to $3,045.61 per unit. This represents an increase of 2.2% per unit from 2017. High-rise properties reported the highest expenses at $5,139.58 per unit, a 2.2% decrease over 2017 results, and townhouse operating expenses increased 12.3% to $2,355.15 per unit. See the chart below.
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Total Operating Expenses
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2017-2018 Condominiums in the U.S. Median expenses in Dollars per Unit per Year
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Building Type
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2017
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2018
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’17-’18 % Change
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High-Rise
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$5,257.29
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$5,139.58
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-2.2%
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Low-Rise
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2,843.80
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$2,812.33
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-1.1%
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Townhouse
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2,096.55
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$2,355.15
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12.3%
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Combination
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2,227.81
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$2,269.17
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1.9%
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All Types Combined
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2,980.72
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$3,045.61
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2.2%
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In unpacking the variances in total operating expenses for all property types combined, we found that:
- Repairs and maintenance expenses increased 4.2% to $1,166.94 per unit per year
- Fixed expenses had the only year-over-year decrease -0.9%
- Administrative expenses increased 2.6%
- Overall, total expenses increased 2.2% to $3,045.61
Replacement reserves
Our review of replacement reserve data found that the typical association added $800 per unit per year to their reserve fund for future replacements and capital reserves. This represents 26.3% of total operating expenses.
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Replacement Reserves
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2018 Condominiums in the U.S. Median dollars added to reserves in Dollars per Unit per Year
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Building
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Total Operational Expenses
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Reserve Dollars
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As % of TOE
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High-Rise
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$5,139.58
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$1,243.74
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24.2%
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Low-Rise
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2,812.33
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766.67
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27.3%
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Townhouse
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2,355.15
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532.94
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22.6%
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Combination
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2,269.17
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465.65
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20.5%
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All Types Combined
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3,045.61
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800.00
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26.3%
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Want to know more?
If you manage a condo, co-op, and/or PUDs, IREM’s Income/Expense Analysis reports will help you:
- Build realistic operating budgets
- Identify ways to trim waste and address inefficiencies
- Uncover emerging shifts in the market
- Prepare feasibility studies, appraisals, and financing requests
- Understand property operating activity in new markets
Visit IREM’s 2019 Income/Expense Analysis Reports to learn more about the operating expenses for a variety of property types, and how our analyses can help you budget better.