Five budget trends in high-rise management

A guide to high-rise management and budgeting

High-rise communities continue to increase in popularity. With the meaning of “home” evolving over the years, residents are expanding their choice of property beyond the traditional options. It’s clear that there is an allure for vertical living, with accessible services and shared facilities promoting a new and united front of the community.

But creating community can take a village— literally. The presence of homeowner associations/strata in high-rises can be seen as a set trend itself as the number of established HOAs continues to rise. With more individuals moving to this type of residence, it can explain the interest in having an organizational structure and form of government that can help keep their homes running smoothly.

When the appointed board begins its work, it can include many managerial entities regarding maintenance, safety, budgets, and more. As changes in the legislature develop and the expectations for new standards of living continue to rise, the complexity of managing high-rises does as well, specifically within the realm of budgeting.
 

A distinctive landscape

With each building carrying its uniqueness, board members may recognize how their community can have differing factors that can affect their budgeting strategies. These can include:

• Type of property
   
• Size
   
• Location
   
• Service levels
   
• Developments
   
• Amenities

Similarly, each market has local requirements to consider; for instance, if your building is in areas prone to specific weather conditions, it may shape distinct approaches to insurance, upkeep, and board actions such as preparations for:

• Hurricanes
   
• Hailstorms
   
• Floods
   
• Fires
   
• Blizzards

High-impact markets

In a recent study of 15 high-rise markets in the U.S. and Canada conducted by FirstService Residential, key and similar factors that drive budgets across different regions were explored.

Within those markets, it was found that high-rise communities are seeing their budgets grow, with some clear guides.

• Hot spots Miami (20%) and Dallas (11%) saw the biggest jumps in budget increases.
   
  • California (8%) followed with notable increases.


• Mid-sized cities like Atlanta (6.5%), Nashville (5.5%), and Chicago (3-5%) had moderate growth.


• Established northeastern markets such as Boston (4.5%), New York City (5.2 - 6.7%), and DC Metro (6%) showed more stable increases.
   
  • These areas faced unique challenges with energy efficiency laws and structural integrity requirements. Similar to Toronto and Vancouver.


• Other areas including Las Vegas, Reno, New Jersey, and Philadelphia, all saw an average of 6% increases.

Top factors driving budgets for high-rises

With the study, the team was able to observe that the five main drivers behind budget increases were consistently identified surrounding:

1. Reserve studies and funding

   New legislation mandating reserve studies is reshaping how buildings plan for the future.
   
   With recent incidents, most notably the collapse of Champlain Towers in Surfside, Florida, there has been an increase in reserve funding across the markets. Aside from the legislative changes in certain states, there is also a heightened awareness and proactive approach that are enticing boards during their budget processes. For a closer look at how these trends impact reserves and their decisions, FirstService Residential’s BENCHMARK report provides in-depth insights and data behind strategic operations for reserve contributions.
   
   For example: “In California, reserve studies are required to be updated annually as part of the budget approval process, which has prompted many boards to adopt a more proactive and data-driven approach when planning,” mentions Daniel Valdes, the vice president of Los Angeles high-rise operations for FirstService Residential.
   
   “With this annual requirement, boards are better able to plan for long-term maintenance and capital improvements, ensuring that their reserve funding is always aligned with the building’s future needs. This practice helps mitigate financial surprises and supports a stable, long-term financial outlook for our communities,” he adds.
    

2. Insurance

   Accessibility and affordability continue to be critical concerns. The study finds that insurance premiums now consume a significant portion of budgets, reaching 24% in Tampa and 21% in Miami, with similar patterns in Las Vegas (17%) and Vancouver (18%) due to market tightening and climate-related risks.
    

3. Utility Prices

   Rising utility costs, especially for sewers and energy, are driving budget increases in many markets. In cold-weather cities, utilities consume a significant portion of budgets, with allocations as high as 25% in Toronto, 19% in New York City, 17% in Boston, and 18% in Vancouver. This trend is expected to continue as global supply challenges and power grid issues impact costs, making proactive management essential.
    

4. Sustainability

   As environmental concerns grow, associations are rethinking budget priorities to support sustainability efforts. Communities are increasingly funding projects that address climate concerns, such as establishing guidelines for solar installations, adding EV charging stations, and incentivizing energy- and resource-saving initiatives.
   
   In New York City, “Local Law 97 is top of mind for many of our clients, particularly older properties with less energy-efficient building mechanicals,” mentions Marc Kotler, president of the New Development Group at FirstService Residential.
   
   New York’s “Local Law 97” introduces a cap on the carbon emissions a building can produce and imposes gargantuan fines for buildings that exceed those limits. Solutions range from modernizations and retrofits to full-scale replacement projects to meet compliance requirements, which can be expensive for a single property.
   
   “Because of current building code and emergent energy legislation, many new developments are 100% electric, much less carbon-intensive than older buildings, and largely in compliance with Local Law 97,” Kotler adds.
   
   With a high impact on budget, this is just one example of sustainability initiatives that high-rise communities in the NYC market are adopting. It is advised that all boards stay informed as changes like these continue to grow, and all differ vastly depending on the area they reside in.
    

5. Retention of top talent

   For the successful operation of the other driving trends, there is a leading entity that helps perform them in the first place, and that’s your greatest asset— your people.
   
   High-rise residents appreciate the reassurance of a dedicated team on-site, making staff retention essential. Across North America, associations are prioritizing retention as a core strategy to maintain quality operations, trust, and strong resident relationships. However, labor costs are high and competitive, especially in major markets like New York, San Francisco, Seattle, and Boston, where associations must vie with other service industries for skilled talent.

What’s ahead for high-rise community budgets?

Looking to the future, rising expenses in areas like insurance, labor, and utilities require strategic planning to sustain community value. As costs continue to increase, boards must also prioritize essential upgrades to support structural integrity, energy efficiency, and sustainability. By preparing now, board members can effectively phase in investments and help them meet evolving standards and resident expectations.

A solid financial strategy plays a crucial role in building appeal and value, especially as the responsibilities of board members and property managers grow. The data provided in this article reflects averages from FirstService Residential-managed properties and offers a framework to support boards in evaluating their unique communities. These insights are intended to help board members fulfill their fiduciary responsibilities, empower resident service, and drive positive change within each community.

“The BENCHMARK report provides valuable benchmarking data that can help board members, developers, and owners understand how their operating costs compare to similar properties. This information allows stakeholders to make informed decisions about budgeting, reserve funding, and capital improvements.”

“By using these insights, boards can set more realistic budgets, justify necessary increases, and provide that they are aligning their funding strategies with the long-term needs of their buildings. It’s an essential tool for promoting financial transparency and ensuring the sustainability of high-rise communities,” Valdes concluded.
 

BENCHMARK: High-rise

High-rise living can offer a unique combination of luxurious amenities, prime locations, and modern conveniences that make it an appealing option for future residents.

For board members in particular, managing a high-rise community can require a keen understanding of operational and budget strategies.

To help you navigate these complexities and stay ahead of industry trends, we invite you to download the BENCHMARK: High-rise guide.

With data compiled from communities in our managed portfolio of 3,800 high-rise buildings across major urban areas across North America, BENCHMARK helps community association boards, developers, property managers, and owners of high-rise properties make informed decisions about their operations and budget strategies.

Contact FirstService Residential, the high-rise management leader, to learn more about services offered for high-rise living.