Shopping Center Occupancy Levels Dip Slightly in 2006, Expenses Rise, New Study Reports
Median income and expenses for open shopping centers increased in 2006 compared to the previous year, according to a new report, though expenses grew at a faster rate.
Median income and expenses for open shopping centers increased in 2006 compared to the previous year, according to a new report, though expenses grew at a faster rate.
Based on average actual occupancy (AAO), the report from the
Institute of Real Estate Management (IREM) shows that income increased to $13.96 per square foot from $13.93 the prior year. Similarly, open center operating costs rose to $4.27 per square foot from $3.99 in 2005.
These are among the key findings reported in the 2007 edition of the Income/Expense Analysis: Shopping Centers, a new benchmarking study published by IREM. Conducted by IREM since 1991, this annual study analyzes the previous year's operating data for 288 open shopping centers throughout the United States. It is designed to provide real estate professionals and investors with current financial data for evaluating the performance of their properties and for preparing appraisals, budgets, loan requests and sales proposals.
Broken out regionally, median income for open centers in 2006 ranged from $11.90 to $18.99 per square foot versus a range of $12.07 to $18.61 per square foot in 2005. In both years, the West Coast reported the highest income per square foot.
Regional results also revealed that the Southeast had the lowest median operating cost for open centers last year at $2.83 per square foot, whereas the Midwest had the highest cost at $5.08 per square foot.
Insurance and taxes accounted nationally for 43.8 percent of the typical open center's total operating costs in 2006. Contracted services - such as landscaping, security and trash removal - accounted for 11.7 percent of operating costs, whereas maintenance/repair and utilities accounted for 9.6 percent and 8.2 percent of operating costs, respectively. The percentage breakdown for major expenses this past year approximate those for 2005, according to IREM.
Finally, the study also reported a national occupancy level for open shopping centers in 2006 of 95 percent, a decline of 1 percent from 2005.
The 200-page study breaks down open shopping center operating data into several categories, including property size, age, type of anchor, type of lease, average actual occupancy (AAO) and gross leasable area (GLA). The study includes national, regional and metropolitan statistics, along with several special reports including leasing fees, expansion, tenant turnover, type of ownership and gross sales analysis.
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