cOSt cOmpariSOnS
Today, real estate managers are receiving constant
pressure to help an owner’s assets perform better.
Maximizing net operating income (NOI) in these weak
financial markets is key. IreM’s Annual Income and
Expense Reports can aid managers in comparing their
buildings to those of similar stature in similar demographics. For example, in a downtown Kansas City, Mo.
office building, we expect electricity to cost $1.49 per
square foot per year while in a regulated market such
as Chicago, electric power is only $0.52 per square
foot. Using this data, experienced managers can quickly
understand if their property is costing them a comparable amount to operate. If not, focusing on a few particular account cost reductions could facilitate a quick
increase to NOI with minimal effort.
To purchase the 2008 IreM Income and
expense reports visit www.irem.org/
publications.
keeping both mom-and-pop establishments and the large
national chains profitable. Remember to do the easy tasks
to keep the appearance of your properties the best they
can be. Simply adding a few flowers to an entrance or
painting a wall is an inexpensive way to show your tenants
continued attention to detail on the property.
In addition to advertising, it is vital that you also consider methods of reducing energy use in your buildings.
In buildings with low occupancy, for example, explore
turning off an elevator during non-peak periods. Your
tenants won’t notice this, but a lower power bill will benefit everyone and make the owner happy. Happy owners
make happy managers.
According to the U.S. Environmental Protection Agency
(EPA), cooling commercial buildings accounts for 15 per-
cent of electricity usage in a building. Utilizing govern-
ment supported tax deductions, you can recommend your
ownerships replace aged heating, ventilation and air con-
ditioning (HVAC) systems with the potential to use 7 to
10 percent less energy than older, less efficient equipment.
The EPA estimates 25 percent of all rooftop HVAC units
are oversized and run inefficiently. Properly sized, newer
equipment will result in improved tenant satisfaction and
lower operating costs, and more efficient dissipation of
heat loads in the building.
brad ashley, CPM ( brad.ashley@cbre.com), is a senior real estate manager for Cb richard ellis, aMO®, in Kansas
City, Mo., where he specializes in the management of industrial properties.
