Average property operating expense rises to $8,694 per unit, per year
SANTA BARBARA, Calif., Sept. 15, 2023 – Rising costs for multifamily operators are the focus of a new research bulletin from Yardi® Matrix. Expenses for multifamily properties nationally grew by an average of 9.3 percent in the trailing 12-month period ending in June.
That growth is 63 percent higher than the 5.7 percent increase during the previous 12 months, according to the new Matrix research.
The recent increase in expenses represents $740 in additional costs per unit at the average U.S. multifamily property, with the average property operating expense rising to $8,694 per unit, per year, according to Matrix.
Insurance led the way in rising expenses. Policy costs were up 18.8 percent on average in the 12- month reporting period. Other expense categories with large jumps include repairs and maintenance (14.2 percent), administrative (11.8 percent), and utilities and payroll (both 7.8 percent).
“Rapid expense growth comes at an inopportune time for the industry. After a long bull market, asking rent growth has decelerated and is likely to remain weak in many metros as deliveries hit levels last seen in the 1980s,” state Matrix experts. “Also, the big jump in mortgage rates .. has produced a large increase in debt-service costs for properties that need new mortgages.”
Learn more about the expense increases and the impact on multifamily owners and operators.
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