August 6, 2003—Despite an uncertain economic scenario for 2003, the U.S. private sector office market reported an increase of 6.4 % in NOI (Net Operating Income) in 2002, according to BOMAs Experience Exchange Report 2003. Most operating expenses, however, also exhibited an increase as well, with the most noticeable occurring in security costs. As expected in post-9/11 America, the commercial real estate market reported a 14.3 percent increase in security spending in 2002 ($.56 per sq. ft. in 2002 vs. $.49 in 2001).
Overall, U.S private sector reported a rise of 1.3 percent in operating expenses last year. Cleaning expenses also jumped 3.4 percent, reasons for which can be attributed to growth in contractual labor. As a result of the California energy crisis in 2001, and the accompanied spike in operating costs, the Experience Exchange Report 2003 conveys that energy expenses have leveled off in 2002. Utility spending decreased by 5.1 percent from $1.97 in 2001 per sq. ft. to $1.87 in 2002.
With the end of the recession, and GDP growth of 2.4 percent in the second quarter, the key statistic to monitor continues to be the unemployment rate. With overall economic indicators reporting positive trends, analysts are predicting an optimistic fiscal 2003 for the commercial real estate industry.
To order the Experience Exchange Report (EER), call 800-426-6292. For a more detailed description of the EER, contact BOMA
