Commercial real estate rents up, efficiency improving

Rent growth and falling operating costs are contributing to the success of the commercial real estate industry, a report indicates.

Increased leasing activity, the implementation of sustainability measures and other changes are contributing to those fundamentals, according to the Experience Exchange Report from the Builders Owners and Managers Association International. At the same time, analysts note the industry may be experiencing higher taxes and a more active stance on the part of state and local tax authorities.

This year the advantages are more notable than the disadvantages, the report indicates, particularly the increase in rental rates. Rental property management firms are experiencing a rise in rent income that is sufficient to outweigh slight increases in operating and fixed expenses. The rise in rental and total income is particularly beneficial after a dip in the metrics last year.

Efforts to push sustainability have allowed many building owners and managers to decrease their utility expenses. Lowering the cost of heating, air conditioning, water and power may be a significant help to apartment owners and managers trying to improve their efficiency.