Table 7 - Average service charge cost class by type (%)

Table 8 - Average service charge cost class by size (%)

Chart 3 - Average service charge progression by cost class as % of total expenditure

 

Table 9 - Average service charge progreesion by cost class as % of total expenditure

Findings 'Management' expenditure which includes management fees and site management costs (accounting fees, site management resourcing costs and health and safety) makes up 24.58% of the total average service charge spend. Charts 4 and 5 show this figure is consistent with last year's data. Percentage contributions in both enclosed centre types remain relatively constant, however, whilst there is an increase in site management costs in Part Open centres from 18.73% to 25.53%. There are decreases in site management costs in Open schemes from 21.12% to 18.24%. 'Utilities' (electricity, gas, water and fuel) averages 7.36% of service charge expenditure. Utilities expenditure percentages vary quite significantly across the various centre types with figures ranging from 10.24% of service charge in enclosed air conditioned centres to 3.18% 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 46.89% of total spend, this is made up of Security 20.21 % (19.13% 2007), Cleaning 19.35% (17.63% 2007) and Marketing/Promotions 7.33% (8.97% 2007). Cleaning and Security costs have both increased as a result of increased minimum wage and statutory holiday entitlement. The total soft services figure is a slight increase from last year but the overall figure remains consistent with the previous five years which have reflected 47 - 48% of total expenditure.

'Hard Services', which include M&E, fabric and building maintenance, account for 15.82% of the average service charge spend in 2008 - a decrease from 17.39% in 2007 and 19.81% in 2006. The primary reason for this decrease continues to be that items of Exceptional Expenditure are now being stripped out of these costs more effectively. Percentage of total spend has remained constant in Enclosed Air Conditioned schemes at 19.82%, however, the remaining scheme categories have seen relatively significant changes compared to 2007. The largest variance is shown in Enclosed Non Air Conditioned centres which show a decrease from 24.46% in 2007 to 18.22% in 2008. Part enclosed schemes have increased from 15.01% in 2007 to 17.42% in 2008 and Open schemes have decreased from 10.22% in 2007 to 7.79% in 2008. 'Insurance' expenditure as a percentage of total average spend has decreased in 2008 to 0.79% from 0.88% in 2007. Insurance expenditure has decreased as a percentage of total spend, however, the rate per sq ft has increased from £0.04 per sq ft in 2007 to £0.05 per sq ft in 2008. 'Exceptional Expenditure' has increased to 4.56% of the total average spend against 4.25% in 2007. The spend in this category has remained relatively constant this year after the large increases shown last year. We believe that this figure will increase in the future as owners, centre management and surveyors become increasingly familiar with the category definition and the types of non recurrent expenditure that should be classified as exceptional.

Chart 4 - Average service charge cost class by Type (%)            Chart 5 - Average service charge cost class by type (%)