Navigating the CRE Landscape: Key Findings from the 2023 Income/Expense IQ Benchmark Data

In today’s rapidly evolving commercial real estate (CRE) market, the importance of market benchmarks cannot be overstated. As economic conditions fluctuate and tenant preferences shift, having access to reliable industry benchmarks allows property managers, senior leaders, and investors to make informed decisions that can significantly impact their bottom line. Market benchmarks provide critical insights into rental rates, operating expenses, and overall property performance, enabling stakeholders to assess their assets against industry standards. This comparative analysis not only helps identify areas for improvement but also uncovers opportunities for growth and optimization. Moreover, in a competitive landscape, utilizing benchmarks can inform strategic planning, ensuring that real estate professionals remain agile and responsive to market changes. Ultimately, leveraging market benchmarks equips firms with the data-driven insights necessary to navigate challenges, enhance operational efficiency, and drive long-term success.

Asset management software, like Lobby CRE, has revolutionized how multifamily firms access and use their operational and financial data. Operating as an all-in-one, cloud-based solution, Lobby CRE is designed to manage and optimize cashflow for faster returns to the Sponsor and Investors. Schedule a Lobby CRE demo today!

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The Value of Income/Expense IQ

The Income/Expense IQ (I/E IQ) Benchmarks, developed in partnership with Lobby CRE, IREM (Institute of Real Estate Management), the National Apartment Association (NAA), and Building Owners and Managers Association International (BOMA), offers interactive financial benchmarks that empower property and asset managers to make informed decisions.

Income/Expense IQ serves as a robust tool for CRE professionals, enabling them to:

Identify Trends and Issues: By utilizing data-driven insights, property managers can pinpoint operational challenges and capitalize on emerging opportunities.

Benchmark Performance: The platform allows users to compare their property finances against industry standards, ensuring competitive positioning in the market.

Create Accurate Budgets: With comprehensive data at their fingertips, CRE managers can develop more precise operating budgets that reflect current market conditions.

Assess Management Efficiency: The benchmarks facilitate the evaluation of management practices, leading to improved operational efficiency.

Key Insights from the 2023 National Summary

This year’s data — the recently-released 2023 Income/Expense IQ Benchmarks — provides the industry’s most detailed, real-time property performance benchmarks for multifamily, office, and industrial real estate nationwide, equipping property managers with the insights needed to optimize expenses and maximize revenue in today’s challenging market.

Here are some of the key findings:

Rent Collection Trends

Rent collection trends reveal the performance of various property types over time, highlighting significant shifts in gross rents collected. By analyzing these trends, property managers can better understand market demands, identify opportunities for growth, and make informed decisions to optimize revenue streams.

Multifamily Communities: Total gross rents collected saw a 5% increase in 2023 compared to the previous year, with a staggering 63% increase from 2015 to 2023. This trend indicates a robust demand for multifamily housing, making it a potentially lucrative sector for investment.

Industrial Properties: These assets experienced a significant 29% increase in gross rents in 2023, reflecting a continued rise in demand for industrial space as e-commerce and logistics expand. This growth has been accompanied by a 23% increase since 2020, showcasing the sector’s resilience and adaptability.

Office Buildings: In contrast, office buildings faced challenges, with a 4% decrease in gross rents collected compared to 2022. However, it’s important to note a 15% increase from 2015 to 2023, suggesting that while the sector is under pressure, it has also shown some long-term growth potential.

Operating Expense Trends

Operating expense trends provide critical insights into the costs associated with managing properties across different sectors. Monitoring these trends helps property managers pinpoint areas of inefficiency, implement cost-saving measures, and enhance overall financial performance in a competitive market.

Multifamily Communities: Operating expenses rose by 12% in 2023 compared to the previous year, with a 61% increase since 2015. This rise underscores the need for effective cost management strategies to maintain profitability.

Office Buildings: Operating expenses increased by 7% in 2023, continuing a trend of 27% growth from 2015. This highlights the ongoing need for office space operators to optimize costs as they navigate market challenges.

Industrial Properties: In a somewhat mixed scenario, industrial properties saw a dramatic 37% increase in total operating expenses in 2023. However, they also experienced an 18% decrease from 2020 to 2023, indicating fluctuations that could impact profitability.

The Importance of Benchmarking

As the CRE market becomes increasingly competitive, benchmarking is vital. By comparing their properties against these national metrics, property managers can identify where they stand relative to the market. This information is crucial for making informed decisions about operational adjustments, budget allocations, and investment strategies.

Utilizing platforms like Income/Expense IQ allows for real-time insights into property performance, helping stakeholders make proactive rather than reactive decisions. For example, if operating expenses are trending higher than the benchmark, property managers can investigate the underlying causes and implement changes to mitigate those costs.

Looking Ahead in Commercial Real Estate

The insights uncovered by the 2023 Income/Expense IQ Benchmarks underscore the importance of data-driven decision-making in commercial real estate. As we move forward, property and asset managers must leverage these insights to navigate market fluctuations, optimize operating expenses, and enhance tenant experiences.

In a rapidly changing environment, having access to accurate data and benchmarks is not just advantageous—it’s essential. As the CRE landscape continues to evolve, embracing tools like Income/Expense IQ will enable professionals to remain competitive and successfully manage their portfolios.

Next Steps

I/E IQ provides you with a dashboard to access benchmark data. Select from asset type and MSA (metropolitan statistical area) and gain property performance insights to build better budgets faster.

New user? Sign up here
Returning user? Access and purchase data here

Lobby CRE seamlessly integrates asset, debt, and equity scenarios to provide complete visibility and control over the decisions that optimize operations, increase valuations, and drive higher profits. Schedule a demo to learn more.