New-York tribune., 1922-12-10
Higher Operating
Costs and Income
From Buildings
Increase Shown in Report
of National Association of
Owners and Managers
of Business Structures

CHICAGO, Dee. o. Cost Of opors
ton as we'll az the lcome derived from
Office and mercantile building. was on
tho upgrade durir = compared with
1920. according go Cd survey just com
pletcd by the National Association 81
Building Owners and Manager. 1axes.
depreciation and Insurance accounted
for the increased operating costs.
Comparison OF scycnty-iivc buildings
wi ioh contributed TO the survey of
1920 and 1921 shows an increase in
operating expenses Of % per cent and
increased income Of l0.4 PEI cent. The
report for 1922 Is from l52 buildings
located in forty-soyen different cities.
including New York, Chicago, Clcyc-
land, San Francisco and Seattle.
The report shows that rents rorgc
from 80 cents per square foot for loft
buildings 10 81 per square foot for the
highest type OF Office building, with q
mean average Of Sl.90 pcr square foot.
lt IS explained that wa.le taif average
is less than the prevailing market price
Tor Office buildines this fact is due 10
long tlmc prc-War leases made rt low
rates.
The tax valuation cf land and bulld.
ing averages S9.95 per square foot. ac-
ccording TO the report. Inc average re-
lationship between t'ic total tax valua.
sion and rent chowe tne latter 10 be
approximately 1880 per cent OF tb,
total tax valuation. The average net
return IS 7.3e per cent OF the tax vlua.
ton, and in realty. 30 per cent earnings
for Office buildings The highest nc,
NnHnmn YfnAVfsI
due TO apparent low land valuation.
says the report
Among the factors increasing oper.
ating costs were increases for repair-
and alterations. Insurance. taxes and
depreciation. Little Rock. Ark. has tho
lowest tax rate. l.J7 per cent. with
Cleveland the highest, 3.55 per cent
and Chicago a close second with 3.27
per cent the report shows
Cost for Heating
Heating is an Important factor ir
building costs the report showing ar
average Of IS pounds OF steam Dol
square foot must be furnished during
the year, costing on an average ~
cents and consuming l7.S pounds oi
coal.
The highest operating expense wa
recorded in Duluth. with the lowest re
ported in San Francisco. While Du
luth had the highest insurance rate
New York and Seattle registered IN,
lowest rates. Duluth also showed the
highest depreciation charges, viii
Omaha reporting the lowest.
Labor conditions treated in the re-
port show that while tho per diem II
Chicago is the highest, the cost pei
square foot in maintenance is much
less than IN many other cities. Th'
matter of keeping building clean va
ries according 20 the city. showing tha
in Pittsburgh II requires 210 days oi
labor for each 1000 feet. while IN In
dianapolis only fifty-sevcn days arr
needed, with Chicago using ii8. The
report also discloscs that power car
be purchased from central plants al
less expense than manufactured on tho
premises, exclusive Of depreciation q
the power plant.
The survey in Chicago shows that II
has ia square feet Of rental space
for each square foot Of ground. De-
troit, with SO feet, Is second. Aver
age rent per square foot for both store
and ONCE rent is $3.50 IN New York,
s2.4s in Detroit and s2-2i in Chicago.
The building values for each square
foot OF rental space was highest IN
San Francisco.
In discussing the question as 10
whether Office buildings arc prohtablc
beyond a certain height. the report
states that IL has been discovered
that both gross and net income IN
crease with the height Of buildings up
- .,rertv- four stories. with the gross
income increasing faster than the net.
indicating that expenses also increased
with height" II would therefore
seem that a limit might be reached
at a point where the increase In ex-
penses have Offset the increase in in.
come. Such a limit however, would
probably depend more upon the SIZE
OF the lot than the height Of the build
ing; that Is, for very tall buildings on
small lots the economical height would
be reached at much lower point than
for tall buildings on large lots