The Birmingham age-herald., 1923-01-14
COSTS MORE NOW
 F0.R OPERATION
 0F SKYSCRAP ERs
Income Derived From Office Building Also Increases, 0fficiaaI of National
 Association Finds

! eration as well as the income derived from office and nercantile buildings was on the upgrade .during 1921 com pared with 1920, according 4tos a sur vey just completed by the National Association of Building Owners and Managers. Taxes. depreciation and insurance accounted for the increased operating costs.
 Comparison of 75 buildings which contributed to the survey of 1920 and 1921 shows an increase in operating expenses of 2.2 per eent, an increased income of 1o4 per cent. The report for 1922 isifrom 152 buildings, located in 47 different cities, including New York, Chicago. Cleveland San Fran cisco and Seattle.
 The report shows that rents range from so cents per square foot for loft buildings to s4 per square foot for the highest type of office build ing, with a mean average of S1.90 per square foot. It Is explained that while this .avarage Is less than the prevailing market price for office buildings, this fact is due to long time pre-War leases maoe at low rates.
 Tax Valuation
 The tax valuation of land and building averages S9.95 4 per square foot, according to the report. The average relationship between the to- tai tax valuation and rent shows the latter to be approximately 1880 per cent of the total tax valuation. The average net return Is 7.30 per cent of the tax valuation. The average net return is 7.39 per cent of the tax valuation, and in reality, 5.9 per cent earnings for office buildings The Oklahoma, due to apparent low land valuation, says the report.
 Among the factors increasing oper- ating costs were increases in repairs and alterations, insurance, taxes. de- preciation and :. fixed items. Little Rock, Ark, has the lowest tax rate, 157 per cent, with Cleveland the highest, 3.55 per cent and Chicago a close second, with 3.27 per cent, the report shows. s~--
 Heating IS an important. factor in building costs, the report showing an average of S3 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. <
 Highest Cost
 The highest operating expense was recorded in Duluth, with the lowest reported 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
 Labor conditions treated in the report show that while the per diem in Chicago Is the highest, the cost per square foot in maintenance is much less than in many other cities. The matter of keeping a building clean varies according to the citt,s showing that in Pfttsburgh it requires 210 days of labor for each thousand feet, while in Indianapolis only 57 days are needed, with Chi cago using 11S. The report also discloses that power can be pur- chased from central plants at less expense than manufactured on the premises, exclusive of depreciation to the power plant.
 Survey In Chicago
 The survey in Chicago shows that
 
 for each square foot of ground. De- troit, with S.2 feet. Is second. Aver age rent per square foot for both store and office rent is s2.60 in New York, SPAS in Detroit and s2.21 in Chicago. The building values for each square foot of rental space was highest in San Francisco.
 In discussing the question as to whether office buildings are profit able beyond a certain height. the report states that it has been dts covered that both gross and net in- come increase with the height of building up to 24 stories with the gross income increasing faster than the net, indicating that expenses also increased with height" It would therefore seem that a. limit might be reached at a point near where the increase in expenses have offset the increase In income. Such a limit, however. would probably depend more upon the size of the lot than the height of the building, 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"