A Master Class in Real Estate Trends: The IREM Income/Expense Analysis[R] Studies

Article excerpt

The REM Income/Expense Analysis studies have been a valuable resource for over 57 years, designed to help property owners and managers, investors, appraisers, lenders, developers and other real estate professionals evaluate and optimize a building's performance. The series is an invaluable resource for building better budgets, identifying ways to trim waste, addressing inefficiencies while making needed improvements, preparing feasibility studies, appraisals and loan requests and much more.

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The Income/Expense Analysis reports provide data for five properties types: Conventional Apartments, Office Buildings, Shopping Centers, Federally Assisted Apartments and Condominiums, Cooperatives and Planned Unit Developments. The following displays the highlights of the five publications:

* PICTURED IS ONE OF THE INCOME/EXPENSE ANALYSIS[R] BOOKS ON SHOPPING CENTERS; THIS IMAGE DOES NOT ILLUSTRATE THE REMAINING FOUR BOOKS IN THIS SERIES.

CONVENTIONAL APARTMENTS

Income/Expense Analysis: Conventional Apartments is designed to help real estate professionals evaluate multifamily development and investment options and compare their building's performance against industry norms.

The income and expense data for each sample is presented in dollars per square foot of rentable area and as a percentage of gross possible income and dollars per unit. Individual metro market reports for more than 150 cities also are included along with an analysis of vacancy rates and operating unit trends, plus a variety of historical trend reports.

These key findings are drawn from a control sample of conventional apartments that have submitted data for the report consistently over the past four years. The report also contains data drawn from a larger sample of submissions gathered over the past five years, regardless of whether that data was submitted consecutively over the five-year period. In terms of sample size, the report analyzes the previous year's operating income and cost figures for 3,156 multifamily rental properties representing over 618,000 units across the U.S. and Canada.

HIGH LIGHTS DRAWN FROM THE FOUR-YEAR CONTROL SAMPLE

Gross possible rents for three of the four conventional rental apartments examined (elevator, low-rise with 12 to 24 units, and garden) rose within a range of 0.2 percent to 8.3 percent in 2011, whereas those for low-rise buildings with 25-plus units fell 1.5 percent.

Net Operating Income (NOT) for the three apartment types rose between 2.9 and 7.5 percent from the prior year. Similarly, total expenses for three building types experienced year-to-year increases--within a range of 0.8 and 8.5 percent--with one type recording no change whatsoever.

NOI for low-rise buildings with 25 or more units rose 7.5 percent to $4.74 per square foot. NOT for elevator buildings increased 4.4 percent to $9.02 per square foot. NOT for garden apartments rose 2.9 percent to $4.96 per square foot.

In terms of expenses, three of the four building types analyzed were more costly to operate in 2011. Elevator building expenses rose 8.5 percent to $8.05 per square foot; low-rise buildings with 12-24 units rose 7.7 percent to $5.71 per square foot; and low rise buildings with 25 or more units reported a 0.8 percent increase to $4.94 per square foot. In contrast, garden buildings reflected no change whatsoever, remaining at $4.99 per square foot.

Additionally the study summarizes data by building type, age, Section 42 properties, turnover and more.

SHOPPING CENTERS

The shopping centers study published in the Income/Expense Analysis: Shopping Centers has been conducted since 1991 and analyzes the previous year's operating data for 487 open shopping centers throughout the U.S. It is designed to provide real estate professionals and investors with current financial data for evaluating the performance of their properties and for preparing appraisals, budgets, loan requests and sales proposals. …