Benchmarking Operating Expenses: Using BOMA EER and IREM Data

Why Benchmark at All?

You know what your building costs to operate. You know what each expense category totals. What you probably don't know is whether those numbers are reasonable compared to similar buildings in your market.

That matters for three reasons:

1. Tenant negotiations. When a tenant's auditor claims your janitorial cost is "excessive," having BOMA data showing your cost is at the 40th percentile for your market shuts down the argument.

2. Identifying savings opportunities. If your security cost is $1.20/SF and the market median is $0.75/SF, that gap is worth investigating. Maybe your contract is above market, or maybe your building has legitimate security requirements. Either way, you should know.

3. Ownership reporting. Telling an asset manager that operating expenses are $12.50/SF is a number. Telling them that $12.50/SF places the building at the 55th percentile for Class A suburban office in the Southeast is a benchmark with context.

The Two Major Benchmarking Sources

BOMA Experience Exchange Report (EER)

What it covers: Office buildings across the U.S. and Canada Data points: Median and average expense per SF by category Breakdowns: Region, city, building class (A/B/C), building size, building age Cost: $300–$500 for non-BOMA-members; free or discounted for members Frequency: Annual (published mid-year for prior year data)

The EER is the gold standard for office building benchmarking. It covers approximately 5,000 buildings and reports data in enough granularity to find meaningful comparisons.

IREM Income/Expense Analysis

What it covers: Office, retail, industrial, residential, and mixed-use Data points: Income and expense per SF by category Breakdowns: Region, metro area, building type, building size Cost: $200–$400 for non-IREM-members Frequency: Annual

IREM's advantage is property type breadth — it's the best source for retail and industrial benchmarks where BOMA data is limited.

How to Build a Benchmark Comparison

Step 1: Select Your Peer Set

Filter the benchmark data to match your building:

The more filters you apply, the smaller and more relevant your peer set. For most analyses, region + class + size range gives you a peer set of 50–200 buildings, which is large enough for meaningful medians.

Step 2: Map Your Categories to Benchmark Categories

Your GL chart of accounts won't match benchmark categories exactly. Map them:

Some GL accounts will span multiple benchmark categories, and some benchmark categories won't have a clean GL equivalent. Document your mapping so it's repeatable year to year.

Step 3: Calculate Your Per-SF Metrics

Use the same denominator the benchmark uses — typically total rentable SF, not occupied SF. BOMA EER uses total office area; IREM uses gross building area. Know which one you're comparing against.

Step 4: Compare and Analyze

Example — 185,000 SF Class A office, Atlanta:

Two categories stand out: R&M at the 82nd percentile and Security at the 88th percentile. These warrant investigation — not because they're necessarily wrong, but because they're significantly above median.

Investigating Outlier Categories

When Your Cost Is High

A high percentile ranking doesn't automatically mean you're overspending. It means you're spending more than most comparable buildings. Legitimate reasons include:

• Building-specific features: A building with a large atrium, water feature, or fitness center will have higher R&M than a standard box.
• Deferred maintenance catch-up: If the prior owner deferred maintenance, you may be spending above-market to restore the building.
• Service level: Class A tenants expect Class A service. If your building competes on amenities and appearance, higher janitorial and landscaping costs may be justified.
• Location-specific costs: Urban buildings in high-cost labor markets will exceed regional medians.

The investigation question: Can you explain the gap to a sophisticated tenant auditor with specific documentation? If yes, the expense is defensible. If no, you may be overpaying.

When Your Cost Is Low

A cost well below median should also get attention:

• Deferred maintenance in progress. Low R&M spending today may mean expensive emergency repairs tomorrow.
• Vendor underperformance. A below-market janitorial contract may correlate with tenant complaints about cleanliness.
• Missed expenses. An unusually low category might mean invoices are being coded elsewhere or not being captured at all.

Using Benchmarks in Tenant Disputes

Tenant auditors often argue that specific expenses are "unreasonable" or "above market." Benchmarks provide your defense.

Scenario: A tenant's auditor claims $1.85/SF for janitorial is excessive and should be capped at $1.50/SF.

Your response with benchmarks:

Our janitorial expense of $1.85/SF falls at the 45th percentile of the BOMA Experience Exchange Report for Class A office buildings in the Southeast region (median: $1.92/SF). The expense is below the market midpoint and reflects the contracted rate with our vendor. The lease does not impose a reasonableness standard on recoverable expenses — Section 7.2 defines recoverable operating expenses as all costs of operating and maintaining the building. We can provide the vendor contract and monthly invoices for your review.

The benchmark doesn't win the argument by itself — the lease terms do. But the benchmark removes the emotional weight from the "that's too expensive" claim.

Benchmarks for Budget Validation

When building next year's operating expense budget, benchmarks serve as a sanity check:

Budget validation example:

If a budget line item exceeds the 75th percentile with no documented justification, either the budget is wrong or you need to document the reason before it's questioned.

Building a Multi-Year Benchmark Trend

Single-year benchmarks are useful. Multi-year trends are powerful.

Tracking your building against market over time:

A building that's moving up the percentile rankings is growing expenses faster than the market. Over four years, this building went from the 55th to the 65th percentile — a meaningful shift that should trigger a category-by-category review to identify which expense lines are driving the divergence.

Limitations of Benchmarking Data

Benchmarks are directional, not prescriptive. Keep these limitations in mind:

Self-reported data. Both BOMA and IREM rely on voluntary submissions. Buildings with good data practices are overrepresented; buildings with sloppy accounting are underrepresented. This can skew medians.

Category definitions vary. One building's "R&M" includes elevator maintenance; another classifies it separately. The benchmark aggregates inconsistent definitions.

Lag time. The 2025 BOMA EER reports 2024 data. In a period of rapid cost inflation, you're comparing current costs to lagging benchmarks.

Geography matters more than averages. A national median is nearly useless. Always filter to the most specific geography available.

Expense composition. Two buildings can have identical total OpEx/SF with completely different category mixes. Total OpEx benchmarks are a starting point; category-level analysis is where you find insights.

How CapVeri Supports Benchmarking

CapVeri calculates your per-SF operating expenses by category as part of the reconciliation process. The platform gives you portfolio-level comparisons across your own buildings — which is often more actionable than external benchmarks because you control the data quality and category definitions. When one building in your portfolio spends $2.40/SF on R&M and the rest average $1.50/SF, that gap is worth investigating regardless of what BOMA says.

Related Resources

• CAM Variance Analysis — Investigate the categories that deviate from benchmarks
• Recovery Ratio Analysis — Connect expense levels to recovery performance
• Operating Expense Budgeting for CAM — Use benchmarks to validate budget assumptions
• What Is CRE FinOps? — The broader framework for financial operations in commercial real estate