FirstService Residential has released its inaugural BENCHMARK guide on high-rise operating costs and budgets. This comprehensive report helps community association boards, developers, property managers, and owners of high-rise properties make informed decisions about their operations and budget strategies.
A common question we receive from our boards and developers is how their budget compares to other communities in the market. While many factors impact a building’s operating expenses and reserve funding strategy, we have found that a high-level benchmarking of major categories can help boards understand and articulate to homeowners the rationale behind their budget decisions and investments.
BENCHMARK: High-rise offers insights about insurance, maintenance, sustainability, amenities, reserves, and capital planning. The data was compiled from communities in FirstService Residential's managed portfolio of 3,800 high-rise buildings across major urban areas in the United States and Canada. This encompasses a range of residential communities, including condominiums, cooperatives, and corporations - both long-standing associations and newly developed.
Key findings from 2024 budgets include:
- In the U.S. and Canada, high-rise communities incurred budget increases between 3% and 20%, driven by soaring insurance premiums, rising utility costs, surging labor expenses, and the need for higher reserve contributions.
- Insurance premiums consume a large portion of budgets, amounting to 24% of budgets in Tampa and 21% in Miami. This trend is also notable in Las Vegas at 17% and Vancouver at 18%, indicating a broader pattern of market tightening and climate-related risk.
- Utility costs are the highest in major cities, with the greatest share of budget in cold-weather climates such as Toronto at 25%, New York City at 19%; Boston at 17%, Vancouver at 18%, but also Las Vegas at 15%.
- Two trends are shaping reserve contributions in high-rises: One is new legislation in the wake of the building collapse in Surfside, Florida in 2021, with reserve contributions as a share of annual budget in New Jersey’s Gold Coast at 18% and in Miami-Dade County at 9% – a figure expected to increase in 2025 when the new law goes into effect. The other trend points to board members proactively increasing contributions with a heightened awareness of best practices — even in markets unaffected by new regulations. That was observed in DC Metro, with 32% of budgets allocated to reserves; 33% in Los Angeles, San Diego, and San Francisco; and 26% in Toronto. In these markets, boards are boosting reserves with two factors in mind: the property's life cycle, anticipating higher expenses for buildings from the early 2000s-2010s over the next decade, and a forward-thinking approach to rising material and labor costs.
The data presented contains averages from a sample of properties managed by FirstService Residential and does not represent industry standards or ideal ratios. Every community association is unique, and this guide is not exhaustive but may be used as a tool to assist boards in their community evaluations.