Average service charge components by percentage
CHART 9
Average service charge cost class by type (%)
CHART 10
Average service charge cost class by size (%)
CHART 11
Average service charge cost class by size (%)
CHART 12
Average service charge cost class comparison by size (%)
CHART 13
Average service charge progression by cost class as % of total expenditure
CHART 14
Average service charge progression by cost class as % of total expenditure
CHART 15
Average 2007 service charge cost class by type (%)
CHART 16
Average 2006 service charge cost class by type (%)
Findings
Management expenditure which includes management fees, accounting fees, site management resourcing costs and health and safety makes up 25.26% of the total average. CHARTS 15 and 16 illustrate this figure is similar in both the 2007 and 2006 data, representing a similar proportion to the 2005 costs.
Utilities which includes electricity, gas, water and fuel averages 6.48% of the service charge. Utilities expenditure percentages vary quite significantly across the various centre types with figures ranging from 9.80% of service charge in enclosed air-conditioned centres to 3.25% of service charge for open centres.
Soft Services, the labour intensive areas of cleaning, landscaping, security and marketing and promotions remains the most significant service component by percentage at 45.73% of total spend, this is made up of Security 19.13%, Cleaning 17.63%, Marketing/Promotions 8.97%. This figure is a slight decrease from the previous five years which have consistently shown 47-48% of total expenditure.
The decrease in Soft Services expenditure as a percentage is a reflection of the decrease in marketing spend in the past 12 months. This has dropped on average from £0.43 per sq ft to £0.37 per sq ft. We believe is a result of more proactive and professional marketing strategies implemented by owners and agents as the BCSC guidelines and the employment of professionals both onsite and in head offices continues to increase. During the same 12 month period cleaning costs have risen marginally to £0.78 per sq ft from £0.77 per sq ft and security costs have increased from £0.79 per sq ft to £0.83 per sq ft in 2007. Security costs continue to rise as the full effects of the recent SIA licensing requirements are shown in the data.
Hard Services, which include M&E, fabric and building maintenance account for 17.39% of the service charge in 2007 - a decrease from 19.81% in 2006. The primary reason for this decrease is that items of exceptional expenditure are now being stripped out of these costs more effectively.
The average spend as a percentage on Hard Services varies significantly between the different centre classes. Somewhat surprisingly enclosed/ non air-conditioned centres spend the greatest proportion on Hard Services at 22%. This is largely down to the fact that many of these centres are multi level centres which require a large amount of lifts and escalators, these are costly to maintain and repair. On the other hand, spending on Hard Services in an open centre equates to approximately half as much at 11.16% of average spend.
Insurance expenditure as a percentage has increased slightly in 2007 to 0.88% from 0.80% in 2006. This reflects an increase in cost from £0.03 per sq ft in 2006 to £0.04 per sq ft in 2007.
Exceptional Expenditure has seen the biggest increase in terms of percentage in 2007 rising from 0.56% to 4.25%. As detailed previously in this report we believe this is primarily due to costs being split out of 'Hard Services'. This figure is highly variable and is driven by the individual centre's planned preventative maintenance schedules. We believe further analysis is required as to the costs which are currently being classified as Exceptional Expenditure and whether this increase in costs is linked to the refurbishment and/or replacement of aging plant and equipment.