The San Francisco call., 1909-11-20
COMPARES COST OF
|. RENTAL PROPERTIES
Data Obtained From the East
Matched With Figures That
Obtain in San Francisco
BY r. E. FAzAcKERLEY


Data obtained from the east as to
the average cost of operating office
buildings and apartments have given
me a very interesting basis for investi-
cation. Comparisons are worth while;
to our local realty owners. Many
their real estate investments pay.
have found this to be particularly true
of owners of some large buildings
especially within the last few days, in
making inquiries for the purpose of
drawing comparisons with the cost of
operating buildings in the east. know
that comparisons are often unreliable
and often misleading, put L have at
tempted to generalize as carefully as
possible and to draw my conclusions on
the same bases of data.
A high class financial building In
New York will net 365 per cent on the
value. Say that the rentable area is
700 square feet the cost Of opera
tion to gross income is SO per cent,
the average gross rent per square foot
per annum s2.s5, the janitors labor,
ETC., to gross income 5 per cent.
DATA FROM SAN FRANCISCO
l can cite first class office building
in San Francisco having more than
100000 square feet of rentable area
The facts relating to the San Fran
cisco building are as follows:
Average gross annual rental per
square foot, S1.60; cost of operation to
gross income. 351s per cent; cost of
operation, 57h cents per square foot
per year; cost of janitors and janitor
work, 20 cents per square foot per
cent of total expense for elevators and
power, 1914 per cent; per cent OF total
expenses for janitor labor, ETC., "a
per cent.
There is considerable variance in the
methods of the large office buildings
covering many floors and they combine
many different features, so it is
safer proposition to compare the
smaller Office buildings The methods
of management and many details are
more uniform. The average square
foot rental of a small modern office
building is s1.95 per year. This is
class of building which is a typical one
among New York structures and there
are thousands of offices in such build
ings which will give this average
rental rate. These compare favorably
with the majority of our office build
ings
These figures obtain in a small New
York office building averaging $4,000
square feet: Rental value per year per
square foot, $1.95; cost of heat per
square foot rentable area per annum,
31s cents; cost of elevator service per
square foot per year, IA cents, cost or
janitor service per square foot per
year, 111a cents.
This gives net return on the value
of the investment of per cent.
HOW THE CITIES COMPARE
The showing for San Francisco
buildings of the same class is as
follows:
Gross rent per foot per year, s1.75;
cost of light and power per square foot
per annum, cents; cost of janltor ana
elevator help, 20 cents; per cent OF
gross rental for janitor and elevator,
liz per cent; per cent of gross rental
for heat, n per cent; per cent OF gross
rental for operation, 2S per cent.
In building averaging SIPS per foot
per year in San Francisco the cost of
heat per square foot will average "
cents, and janitor and elevator help
25k cents per foot yearly.
The cost of maintenance and rents of
our many office buildings has been a
study and source of comment in this
city. The experience of our firm has
been that careful management in de-
tails will always bring results. The
problem of the apartment house own
er. however, will receive more no.
ticeabIe results in the hands of the eX-
perienced manager than any other class
of property. Many properties of this
class are economically handled, never
theless. / know of one or two apart
ment houses in San Francisco where
the cost of operation has not varied
cents per room in two succeeding
years. There are few office buildings
which can show this result, yet /
wonder how many apartment houses
can?
The occupancy of the apartment
house is so variable and there is so
much trouble with help and waste and
leakage factors are so evident that
the apartment house loss varies ac-
cordinglv. In New York apartments say
the rentable rooms, not including baths,
dressing rooms or closets, are 100.
THE cost of elevator, heat, etc.
to gross income is As per cent; the
rental value per room per year is $3.50;
with no charge for vacancies, after
paving taxes and insurance, will net
4 per cent; another grade paying $3.50
per room will net nearly Ga per cent.
WHAT THEY SHOULD COST
In San Francisco apartment houses
should be operated for 20 per cent
of the gross rental, otherwise they re-
ouire the immediate care of special
ist. There must be something wrong.
Take an apartment house with eleva-
tor. public halls, heat, hot and cold
water and other incidentals. paying
s1S5 a year per room, for illustra tion.
The cost of operating should be about
II per cent of the gross rents for jani-
tor service, garbage and incidentals to
the cleanliness of the building; fuel
for heat and water, cost about 4% per