In a study by Dupre+Scott they found a growing number of apartment building investors in the Puget Sound region are charging tenants for water, sewer and garbage which make up can make up a pretty large chunk of operating expenses:
Two-thirds of the properties we surveyed pass through water and sewer charges to residents, and 50% also pass through garbage costs. The average monthly water/sewer charge in the region ranges from $46 for studios to $70 for three-bedroom units. Adding garbage charges increases costs to $55 for studios and $90 for three bedroom units. Our March Apartment Expense Report found that utility charges paid by residents increased 50% between 2008 and 2012.
Do you or have you considered charging for water and sewer via sub-metering, individual metering or a RUBS system? how about garbage? Continue reading Charging apartment building residents for water, sewer AND garbage- the growing trend.
My Exec Sum: Seattle apartment building investment results from Essex Property Trust Q1 call:
- Seattle demonstrated exceptional same-store NOI and revenue growth of 11.2% driven by very limited supplies of housing and job growth that exceeds national averages
- On operating expenses we expect a 2.3% increase for the second quarter ’12 over the second quarter in ’11
- Seattle rents were up 6.5% compared to the first quarter of 2011. So depending on the submarket, we are now 4% below to even with our prior rent peaks.
- renewal offers for June and July averaged +6% to 8% in Seattle
- As of April 30, its occupancy was 96.1% with a net availability of 5.1%.
- We view this turnover activity (50-55% YoY) as healthy because it provides us with more opportunity to grow rents. Additionally, we only saw a nominal increase in move-outs due to home purchases and affordability.
- Cap rates continue Continue reading Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming
As every landlord knows, operating expenses (OPEX) are an important element of commercial real estate investment performance. In spite of the important role OPEX plays in investment performance, there is very little research that analyzes the structure of these costs or identifies what drives the differences in these costs across markets. This article aims to share the latest findings on the drivers and structure of OPEX.
… That industrial variable costs have a lower elasticity than those of the other property types accords with what investors in this asset class generally experience: that these properties are usually cheaper to operate. A perhaps more surprising finding is that the elasticity coefficients for office, multifamily, and retail—property types with significantly different operating structures—are fairly similar to one another. We are conducting further research to better understand this finding.
See the whole piece here: What Drives Operating Costs in Commercial Real Estate?