New York City was named the most expensive U.S. commercial real estate market in a report released by the Building Owners and Managers Association (BOMA) International.
New York buildings had the highest total rental income of $48.27 per square foot, based on operating data from 2010. Washington, D.C. was second with $42.63 per square feet of rental income, while San Mateo, Calif., a San Francisco suburb, was third at $41.61 per square foot. Other expensive cities included Boston, San Jose, Los Angeles, West Palm Beach and Chicago.
New York also had the most expensive operating and fixed expenses, costing $21.44 per square foot. Washington, D.C. was second with $16.86 per square foot and Boston was third at $15.16 per square foot. Morristown, N.J., San Francisco, Miami, Santa Monica, Calif., Plainfield, N.J., Chicago and Los Angeles also had some of the highest expenses.
Operating expenses included utilities, repairs and maintenance, cleaning, security, roads and grounds. Fixed expenses included real estate taxes, property taxes and insurance.
Operating expenses increased in most markets, according to BOMA, while fixed expenses were volatile, which could be attributed to rising utility costs and real estate taxes. Many cities are looking to raise real estate taxes to balance budgets, but property owners are contesting increased taxes because property values have decreased since the downturn began, said BOMA.
The study encompassed 940 million square feet of office space in 6,500 buildings, spanning 278 markets.