By Dees Stribling, Contributing Editor
New York–A new report by Cooper Square Realty Inc., a major residential property management company in New York City, contains some unpleasant news for condo-unit owners and co-op shareholders in the city. Average maintenance and common charges are going up next year–more than they do most years.
According to the report, which is based on data collected from annual budgets adopted by condo and co-op boards citywide, condominium owners will see their annual common charges increase between 4.5 percent and 6.5 percent on average in 2011. Also next year, shareholders in cooperatives will see their annual maintenance charges increase between 5.5 percent and 7.5 percent on average.
“Historically, increases have been normally in the 1 percent to 3 percent on an annual basis,” Dan Wurtzel, president of Cooper Square Realty, tells MHN. “But in more recent years, operating expenses for energy, labor and real estate taxes have resulted in larger increases in condominium common charges and cooperative maintenance charges.”
Upward pressure on condo common charges will come from other sources as well. Water and sewer costs are up, and Fannie Mae and Freddie Mac recently imposed sales guidelines that require allocating at least 10 percent of a property’s annual budget to reserve funds. According to Cooper Square Realty, about 80 percent of the condominiums it manages have already allocated the mandated 10 percent of their budgets to a reserve fund.
Specific to New York, the new four-year agreement between Local 32BJ of the Service Employees International Union and the Realty Advisory Board will mean increased wages, healthcare costs and pension-fund contributions for workers in residential buildings. The agreement affects costs for both condos and co-ops in the city.
In some ways, co-ops are doing better at holding the line on the impact of increasing costs through a bit of financial engineering. “The difference between co-op and condo percentage increases is narrower this year than anytime I can recall,” adds Wurtzel. “That’s because many co-ops are taking advantage of historically low interest rates to refinance their underlying mortgages in order to offset real estate tax increases.”