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IREM’s 2019 Income/Expense Analysis Reports on Conventional Apartments

August 19, 2019 | IREM


IREM’s Income/Expense Analysis Reports help evaluate the performance of properties effectively by providing clean, reliable data. Data collected includes total collections, total expenses, operating ratios, vacancy rates and rent loss year over year. Reports are audited to ensure the information received is relevant to normal operating experience.

To create the 2019 Income/Expense Reports for conventional apartments, 2018 data was collected from 4,224 properties with 894,868 units in four categories – elevator buildings, low-rise buildings with 12-24 units, low-rise buildings with more than 25 units, and garden buildings.

These are the highlights:

Net Operating Income
Net Operating Income (NOI) is defined as income remaining after operating expenses are paid, but before expenditures for ground rent, mortgage interest and amortization, capital improvements and income tax. In 2018, elevator buildings reported the highest NOI at $12.34 per square foot, but this is an increase of 5.0% over 2017. Low-rise buildings with 12-24 units reported the lowest NOI at $5.96 per square foot, a decrease of 2.0% over 2017. Low-rise buildings with 25 or more units came in with an increase of 6.8% at $8.77 per square foot, and garden apartments reported $7.98 per square foot, a 4.2% increase.

Vacancies and Rent Loss
Vacancies and rent loss vary among metropolitan areas, but overall, 2018 results varied little from 2017. The lowest levels were found in Rochester, NY, with a median loss of 4% or less for three of the four building types reporting.

Total of all Expenses
Across the U.S., operating expenses ranged from $4.12 to $10.84 for all building types. Northeastern states reported the highest expenses for all building types, with elevator buildings reporting the most at $10.84 per square foot.

Operating Ratio
Operating ratio is total expenses divided by total collections. The lower the number, the better. Nationally, low-rise buildings with 12-24 units experienced the highest operating ratio at 56.1%, a 12.6% increase over 2017, while garden apartments reported the lowest at 44.8%.  Regionally, low-rise buildings with 12-24 units in the Mid-Atlantic States experienced the highest operating ratio at 81.3%, while garden buildings in the Rocky Mountain and Northwest regions reported the lowest at 29.2%.

Annual Turnover Ratio
Turnover ratio is calculated by dividing the number of new tenants moving in each year over the total number of apartments in the building. All four building types reported decreases nationally, with garden apartments experiencing the largest turnover ratio at 44.9% and low-rise buildings with 12-24 units reporting the lowest at 28.3%.

IREM’s 2019 Income/Expense Analysis Reports are available as hard-copy books, interactive PDFs that enable data downloads into Excel files, and customizable cloud-based online labs that provide 20 years of data. And, data can be sorted by metropolitan area, building age and type, geographic location, and a few more ways.

In addition to conventional apartments, reports are available for these property types:

  • Office buildings
  • Shopping centers
  • Federally assisted apartments
  • Condominiums, cooperatives & PUDS

Visit the IREM 2019 Income/Expense Analysis Reports page for more information.


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