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Average facility costs rose 0.77 percent, year over year, as indicated by the non-residential operation cost index. Residential occupancy costs increased by 0.31 percent and the CPI's (Urban Consumers, All Items) increased 1.47 percent over the same period.

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Average facility costs rose 1.25 percent, year over year, as indicated by the non-residential operation cost index. Residential occupancy costs increased by 0.96 percent and the CPI's (Urban Consumers, All Items) increased 1.59 percent over the same period.

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As part of a multiyear benchmarking program, New York City requires all privately-owned large buildings-50,000 gross square feet and over-to annually measure and disclose energy and water use. The survey results for 2010 are presented in a recent report. [1]

The findings of the report were somewhat limited by the amount of usable data and the ability to compare the results to the U.S. Department of Energy CBECS (2003) models. [2] Among the conclusions were the obvious: energy use could be reduced if the most energy intensive users used less--and the ambiguous: double digit reductions in the energy consumption and emissions of the largest buildings could be achieved "very cost effectively through improved operations and maintenance."

The study also found that average energy use per square foot was less than national averages (for different building types) because of the region's older building stock. In fact, for office buildings there was a clear negative correlation in energy efficiency and building age. The energy use per square foot of buildings over 80 years old was found to be almost 40 percent lower than for buildings built after 1990.

At first, this may seem counterintuitive, given the advances of building technologies, improved building codes and a substantial economic literature demonstrating the productive depreciation of buildings over time. Yet the findings become somewhat understandable if activities requiring high demand uses (trading floors, media studios, data centers) concentrate in younger buildings.

More difficult to understand is what policy options are available for reducing energy use among these young buildings. Statistical correlations suggest large size, high worker density, long operating hours and mixed uses are all related to energy use-but these are not readily changeable. Equipment retrofits can yield substantial energy savings for older buildings, but may be limited for the younger buildings already using current technologies.

Average facility costs rose 1.32 percent, year over year, as indicated by the non-residential operation cost index. Residential occupancy costs increased by 0.83 percent and the CPI's (Urban Consumers, All Items) increased 1.76 percent over the same period.

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Average facility costs rose 1.1 percent, year over year, as indicated by the non-residential operation cost index. Residential occupancy costs increased by 1.17 percent and the CPI's (Urban Consumers, All Items) increased 2.16 percent over the same period.

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Average facility costs rose 0.94 percent, year over year, as indicated by the non-residential operation cost index. Residential occupancy costs increased by 0.83 percent and the CPI's (Urban Consumers, All Items) increased 1.99 percent over the same period.

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Whitestone Indexes for July 2012

We recently came upon an interesting survey of office building operating costs published by the Hong Kong Institute of Surveyors.^[1] Reported costs varied substantially by building grade, but building size and age had little discernable effect. Total operating costs for comparable buildings ($6.77 per square foot) were within 10 percent of Whitestone estimates. Specific costs for energy and management varied more widely and merit further study.

Questionnaire data was compiled from a sample of 52 office buildings, classified in grades of A, B, or C, in terms of construction quality and amenities. Operating costs included those commonly found in commercial and government charts of accounts.

The authors found little systematic difference in operating costs, except by building grade. Size had little discernable impact, even with some buildings larger than 100k square meters. There was no evident trend in costs by building age across sample ages from 2 to 35 years. However, average costs did vary substantially by grade, with B grade and C grades less than A grade by 27 percent and 55 percent, respectively.

The average monthly costs for twenty A grade buildings were $55.61 per square meter in 2009 Hong Kong dollars. For comparison purposes, we converted these costs into annual 2012 U.S dollars per square foot.

Annual costs according to the adjusted HKIS data are $6.77 per square foot. These are within 10 percent of an alternative value based on a model office building, as estimated by Whitestone.^[2] This is not surprising, given that the definition of an A class building-high quality finishes central air conditioning, elevators, and professional management-is consistent with the definition of the model building.

There are substantial differences in some specific costs, particularly electricity and management. These could be the result of a variety of causes, including: different levels of service, labor productivity, commodity costs, exchange rates, or account definitions. Further study of the detailed costs could be used to adjust the survey tool and increase the precision of the Whitestone model, bringing the two estimates even closer.

-Peter Lufkin

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