Maintenance Cost per sqm in an Office Building — How to Compare Correctly and Avoid the Trap

"How much does it cost to maintain an office building per sqm?" is one of the first questions property owners ask — and one of the most misleading. Comparing a price per sqm without understanding the context is like comparing car prices without knowing the model, the age and the history. After years of managing buildings in Israel, I can say with confidence: the single figure of cost per sqm is a tool with destructive power in the wrong hands. This guide explains how to use it correctly.

Why price per sqm alone is misleading

Two buildings with the same floor area in the same business district can show cost gaps of 30%–50% — and both be well managed. A new building with a BMS, a branded elevator and 24/7 service will cost more than an older building with a remote HVAC unit and a key you can reach during reasonable hours. That is not waste — it is the difference between different products.

In practice I have seen a building that signed with a management company at a "relatively low price" and, six months later, discovered that the contract did not include quarterly safety-system inspections, replacing bulbs in the common areas, or elevator maintenance — three items that together cost more than the premium it had saved. A low price per sqm on paper became very expensive in the field.

The real factors that drive cost

To compare correctly, you must know the most significant variables:

• Building age and system condition: HVAC, electrical and plumbing systems over 15–20 years old generate higher breakdown maintenance and often require non-standard spare parts — which raises cost significantly.
• System complexity: A building with a BMS (computerized building management system), a generator, a sprinkler system, dual elevators and central HVAC requires more qualified manpower and a higher base cost — regardless of how efficient the building manager is.
• Occupancy and usage level: A building with 300 employees used six days a week wears down the access systems, the elevator and the corridors far faster than a half-empty building.
• Scope of the contracted service: What exactly is included in the contract? Preventive maintenance only? Full management? Cleaning? Security? Landscaping? Every add-on changes the baseline.
• SLA level and emergency response: Responding to a fault within an hour, 24/7, including weekends and holidays, costs more than responding within a business day. Not because of inefficiency, but because it requires a different manpower structure.
• Building standard and classification: A Grade A building in Tel Aviv with a luxurious lobby, marble and a "glass tower" facade requires aesthetic upkeep and appearance maintenance that a Grade B building does not.
• Vendor contract terms: Management companies with large buying power — a portfolio of dozens of buildings — secure better prices than a single-building operator. This is a factor you never see in the price per sqm.

How to normalize — building a fair comparison

Normalization is the process that turns a misleading comparison into a reliable one. It has four steps:

1. A consistent floor-area basis

Gross versus net is not a technical detail — it is a difference of tens of percent. Net area is the actual usable area; gross includes walls, stairwells, shafts and parking. One company calculates on gross, another on net — and the "cheaper" offer may in fact be the more expensive one. Always ask for the basis in writing.

2. Breaking it down into standard categories

The correct breakdown I work with includes at least five components:

• Planned preventive maintenance (PPM): periodic inspections, lubrication, calibration — what prevents faults.
• Breakdown maintenance and repairs: the average annual cost of unplanned repairs.
• Energy and electricity: sometimes included in the contract, sometimes separate — this must be made clear.
• Services (cleaning, security, landscaping): worth separating from technical maintenance.
• Management and administration costs: the building manager's salary, software, insurance.

When someone presents me with a new offer, the first thing I do is ask for this breakdown. A single flat price with no breakdown is a red flag.

3. A multi-year time frame

A single year tells you nothing. CapEx cycles — replacing an elevator, an HVAC system, a roof — are events that occur once every ten to twenty years. A building that has just undergone a full renovation will show a low annual cost; a building facing an elevator replacement costing a significant sum will look "expensive" in that specific year. The benchmark must look at a multi-year average.

4. Insurance coverage and legal compliance

A management company that lowers cost by cutting insurance coverage or working with unlicensed subcontractors puts the property owner at risk. The Business Licensing Law and the safety regulations (including Israeli Standard (SI) 1220 for elevators and the requirements of the Fire and Rescue Authority) require compliance with standards — and if a cheap vendor fails to meet them, the legal risk falls on the building owner.

Comparison pitfalls we see again and again

• Hiding "not included" in an appendix: an offer with 15 exclusion clauses is not a cheap offer. I know of a case where a "minor repair" in the exclusions appendix covered any repair above a modest threshold — meaning almost every fault.
• Unverified market averages: "the market average is X per sqm" — who measured it? When? On which buildings? An anonymous market average is a marketing tool, not a benchmark.
• Comparing an old building to a new one: a 5-year-old building against a benchmark from a 30-year-old building is an irrelevant comparison — you must compare to buildings similar in age and complexity.
• Ignoring the cost of downtime: "cheap" maintenance that leaves tenants suffering from heat and electrical smoke at the peak of summer is one of the most expensive things that can happen — both in practice and in reputation.
• Comparing against a one-off point in time: a building that recently finished a renovation cycle will look "cheap" this year. That is not a measure of efficient management.

Questions to ask before any comparison

Before concluding that a building is "expensive" or "cheap" relative to a benchmark, it is worth pausing to answer seven questions:

1. What exactly is included in the contract — and what is not?
2. Is the calculation based on gross or net area?
3. What is the SLA level (response time, hours of operation)?
4. What is the age of the core systems — and what is the replacement schedule?
5. Does the figure represent an unusual year (major renovation / code fault) or a multi-year average?
6. Does the vendor meet all regulatory requirements (license, insurance, standards)?
7. What percentage of maintenance activity is preventive — and what percentage is breakdown?

A building with 24/7 response and advanced systems will cost more than a standard building — and that is entirely logical, not wasteful. A comparison without context always leads to wrong conclusions.

How to use a benchmark as a diagnosis, not a verdict

A benchmark is a tool for asking questions, not for answering them. The correct way to use it:

• If the cost is higher than the benchmark: ask — is it because of old systems? A high SLA? Or inefficiency that can be fixed? The answer may be all three at once.
• If the cost is lower than the benchmark: ask — is it efficient management, a partial contract, or "starving" preventive maintenance that will blow up later? I have seen buildings save for two years and receive a massive bill in the third.
• Break it down into categories: perhaps the technical maintenance is fine but the energy is high — a flag to check energy efficiency. Perhaps cleaning is pricier than usual — worth reviewing alternative offers. The breakdown shows where to act.

A benchmark that leads to the right questions is worth far more than a single number that leads to the wrong conclusion.

Value metrics — not just cost, but what you get

Cost per sqm is a single number; it does not tell you whether you received good value. To assess that, you must cross-reference the cost with real performance metrics (KPIs):

• How many unplanned faults occurred during the year — and what was the average downtime?
• What percentage of PPM activities were actually carried out versus the plan?
• What is the tenant satisfaction rate (which can also be gauged with a simple survey)?
• Did the building pass all regulatory inspections — fire, elevator, electrical?

A building whose cost is slightly above average, but with minimal faults, near-zero downtime and satisfied tenants, is usually the cheaper one. And a building that looks cheap in an annual review but has tenants complaining every week is one of the most expensive there is.

Why TCO matters more than annual cost per sqm

Total Cost of Ownership (TCO) looks at the entire lifecycle of the asset, not just the recurring expense. It includes:

• Recurring annual cost (maintenance, services, management)
• Future CapEx — planned system replacement
• The cost of downtime (faults that affect tenants and lease agreements)
• The impact on the asset's value over time

A building with high-quality preventive maintenance may cost more per sqm this year — but over ten years it saves on emergency replacements, preserves the asset's value and retains tenants. The correct comparison is always multi-year.

For a deeper dive, see calculating TCO for a management company and 5 ways to cut maintenance costs. At Domera we present a transparent cost breakdown for every asset — get a quote.