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Income from Office Buildings Declining, Report Indicates

June 23, 1985

A downward trend in net operating income for private sector office buildings in the United States has been reported in the 1985 Experience Exchange Report published by the Building Owners & Managers Assn.

The overall average increase in net operating income from 1980 to 1984 was 36%. From 1982 to 1983, net operating income increased by 13%; it was almost flat from 1983 to 1984, rising by 1%. The above figures are adjusted for annual change in the Consumer Price Index.

The economic performance of office buildings continued to reflect the consequences of a high rate of construction activity relative to demand for space in 1984.

The EER report noted that property taxes rose the most, implying almost a $1 billion increase in expenses. The second highest source of expense increases was energy, which rose by 80 cents per square foot ($720 million); repair and maintenance costs increased by 6 cents per square foot from 1983 to 1984 ($540 million).

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