Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-12-08
PRODUCE,
EARLY BONDS.
OFFICE BUILDING
INCOMES INCREASE
WITH UPKEEP COSTS

! WITH UPKEEP COSTS
Depreciation And Insurance Account
For Greater Operating Costs.
Chicago.-Cost Of operation, as
we'll as the income derived from Of
flee and mercantile buildings was on
! the upgrade during 1929, compared
with 1920, according to Il survey just
completed by the National Associ-
alton Of Building Owners II Mana
gers. Taxes, depreciation and insur-
ance accounted for the increased
operating costs. =
Comparison Of IS buildings which
contributed to the survey of 1920 and
1921 shows an increase in operating
expenses of 20 per cent, an increased
income Of 1914 per cent. The re-
port for 1922 is from 1852 buildings
located in AZ different cities includ-
Ling. New York. Chicago. Cleveland,
San Francisco and Seattle.
Rents Range.
The report shows that rents range
from SO cents per uar DOT for loft
buildings to 81 per squar loot for
the highest type Of office building,
square foo 1t is explained. that
while this average is less than the
prevailing market price for office
buildings, this fact is due to long
time pre-war leases made at low
ratesA 4; "
The tax valuation Of land and
building averages 1895 per square
foot, according to the report. The
average relationship between the
total tax valuation and rent, shows
the latter to be approximately 1880
per cent Of the total tax valuation.
The average net return is 7.39 per
realty, SO per cent earning for Office
buildings. The highest net income
reported was from Oklahoma due to
apparent low land valuation, says the
report. IT,! =,
Among the factors increasing oper-
ating costs were increases in repairs
and alterations. insurance, taxes. de-
! probation and fixed costs. Little
, Rock, Arkansas, has the lowest tax
rate, 1877 per cent, with Cleveland
the highest, 3.55 per cent and. Chi
cago a close second with 1927 per
cent, the report shows.
Heating Is an important factor in
building costs. the report showing al
! average Of SS pounds of steam per
square foot must be furnished during
the year, costing on an average 7.6
cents and consuming 17.S pounds of
coal.
The highest operating expense was
recorded in, Duluth, with the lowest
reportfd in San Francisco. While
Duluth had the highest insurance
rate. New York and Seattle regis
tered the lowest rates. Duluth also
showed the highest depreciation
charges, with Omaha reporting the
lowest. 5'
Labor conditions i'll the report
show that while the per diem in Chi
7 cago Is the highest, the cost per
square foot in maintenance is much
less h in many other cities. The
matter of keeping a building clean
varies according % the city, showing
that in Pittsburgh 1t requires 210
days of labor for each thousand feet,
while in Indianapolis only 81 days
are needed, with Chicago using 118,
The report also discloses that power
! at less expense than manufactured
on the premises, exclusive Of de-
probation to the power plant.
The survey in Chicago shows that
1t has 11.4 square feet of rental space
for each square foot of ground. De-
troit, with 80 feet, Is second. Aver
age rent per square foot for both
store n oft1ce rent is $3.50 IN New
York, $2.48 in Detroit, and 1921 iii
Chicago. The building values FOR
Aeach$ square foot of rental space was
highest in San Francisco.
In discussing the question as ia
whether Office buildings are profitable
beyond d certain height, the report
states that n has been discovered
that both gross and net income in
cas- with the height Of building UP
to twenty -four stories, with the gross
income increasing faster than the
net, indicating that expenses also In
crease with height" It would there
fore seem that a limit might be
reached al a. point where the In.
crease, In expenses have Offset the
increase IN Income. Such a limit,
however. Would probably depend
Z more upon the size OF the lot than
the height ~ the building, that Il
for very TAN buildings on small lots
tho economical height would be
reached at a much lower point thar
for tall buildings on large lots"
~ ~ N.Nt - ~ NJ Il NG ~