Onsite Payroll Costs Rise Above $2,000 Per Unit
Asset managers report that onsite payroll costs are increasing, rising from approximately $1,700 to over $2,000 per unit. This escalation in operational expenses puts pressure on property budgets. For luxury properties, it highlights the challenge of balancing premium service levels with efficient staffing models.
- On a national level, combined administrative and payroll expenses climbed to $2,323 per unit in 2024, an increase of 3.81% year-over-year and nearly 20% higher than in 2021. - A tight labor market is a primary driver, with wages for property management, maintenance, and leasing staff increasing by 10-25% in some markets to attract and retain qualified employees. - While payroll costs have risen, they are part of a broader trend of escalating operating expenses, which surged 24.4% cumulatively between 2021 and 2024 for market-rate properties. - Other significant cost pressures include property insurance, which has seen premiums jump 172% over the past decade, and repairs and maintenance, which reached $1,098 per unit in 2024. - In Downtown Chicago's Class A market, these rising costs coincide with average gross rents exceeding $3,000 for the first time in 2024, a 2.8% increase from the previous year. - To offset rising labor costs, some property managers are adopting new technologies; smart access control systems can increase maintenance staff efficiency by 20% and reduce work requests by 10%, saving an estimated $80,000 per building annually. - Companies are also restructuring staffing models by centralizing leasing and administrative roles and utilizing temporary staff during peak seasons to avoid overtime costs and the expenses associated with overstaffing during slower months.
