FirstService Residential is taking a deeper dive into high-rise operations. Its inaugural BENCHMARK reviews insights regarding amenities, insurance, maintenance and staffing and how these areas impact rental housing. There were two major trends found: New legislation following the collapse of a building in Florida in 2021, and secondly, reserve funds are increasing because companies are expecting higher expenses and are reviewing building longevity.
There are five areas impacting high-rise budgets the most: Reserve funding, staffing, insurance, utility prices and environmental aspects related to "going green." Insurance is a major player in multifamily budgeting as some markets feature a higher share of funds going toward the risk management tool. The Tampa/St. Petersburg metro in Florida has 24% of budget expenditures going toward insurance; Miami-Dade is at 21%; and Las Vegas/Reno was at 17% of the budget. "In Miami, for example, higher property appraisals have resulted in an increase in replacement values and, ultimately, insurance premiums," according to the report.
Meanwhile, California (Los Angeles, San Diego and San Francisco metros) are putting aside 33% of their budgets for the future. The Washington, D.C., market is just behind at 32% of the budget going toward reserve funding. Elsewhere, Boston and New Jersey's Gold Coast/Philadelphia were at 18% of budgets.