Has it been a challenging year for your condominium community? If you answered yes, you are not alone. The cost of everything, including insurance, utilities and staff, is up, and condo owners are feeling the pressure.

The bad news is that costs aren’t decreasing any time soon. The good news is that more stability is predicted in some areas, meaning boards may be able to issue modest assessment increases in 2026.  

Let’s take a look at the major trends currently impacting high-rise condominium communities, and what some communities may do to adapt.

Table of contents

• Trend #1 – Mandatory reserve fund contributions
• Trend #2 – Large increases in insurance rates
• Trend #3 – Higher utility rates
• Trend #4 – Upgrades/renovations required to make existing buildings stand out
• Trend # 5 – Tighter labor market

Trend #1 – Mandatory reserve fund contributions

The Champlain Towers South collapse was a devastating event. However, condo communities and law makers have implemented strategies to ensure nothing like this happens again.

Community associations in Florida, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, Ohio and Virginia all have mandatory reserve fund requirements. Some states have created laws regarding reserve studies and funding in response to the Surfside collapse.  

Florida, for example, states that annual budgets shall include reserve accounts for items such as, but not limited to, roof replacements, pavement, painting and other items with a replacement cost exceeding $10,000.  The amount to be reserved for an item is determined by the association’s most recent structural integrity reserve study, which must be completed by December 31, 2024.

If the amount to be reserved for an item is not in the association’s initial or most recent structural integrity reserve study, or the association has not completed a structural integrity reserve study, the amount must be computed using a formula based upon the estimated remaining useful life and estimated replacement cost, or the deferred maintenance expense of the reserve item. Furthermore, as of December 31, 2024, condo members cannot vote to underfund reserves.

Other states like Arizona, Texas and North Carolina, have statutory guidance for reserves, but do not have a statutory requirement to keep reserves adequately funded.

This is a positive change, but it does create financial challenges, especially for older buildings that require several repairs or renovations. It’s going to be a struggle for some communities to meet new reserve requirements.   

In a 2024 study conducted by the Foundation for Community Research, participants were asked to describe the status of their reserve funds. Note that not all participants were from states that have reserve requirements.

26% of respondents said their reserves were fully funded for major structural components.

• 11% said reserve funds would be saved in time for the replacement of a major component
• 25% said funds were at 50% or more
• 32% said funds were less than 50% funded
• 1% said no reserve fund existed
• 6% said “other”

At least 1/3 of participants are not prepared to pay for future expenses when major components need to be repaired or replaced.

The solution

If your community’s reserve fund is lower than it should be, start with this reserve study resource from the CAI. It suggests that condos should have a funding plan, and investment policy.

Keep in mind that boards are expected to work with experts to create a realistic plan; don’t attempt to solve this problem on your own. Consult with a reserve specialist, investment consultant, and accountant, to come up with a strong funding plan.

Trend #2 – Large increases in insurance rates  

Insurance premiums have skyrocketed in almost every North American city. In Tampa, some condo communities are now devoting as much as 24% of their budget to insurance. Vancouver communities are using about 18% of their budget for insurance.

Fewer insurers, more frequent claims, extreme weather events, and higher property replacement valuations have resulted in premium hikes ranging anywhere from 10% to 150%. In Hawaii, one condo community says it will have to cover a 325% increase this year.

The solution

Experts who specialize in condo insurance may advise communities to ensure their broker specializes in community associations so that the building gets the right advice in order to make the best decisions possible.

Condos may also need to consider switching to a “bare walls” insurance policy, but this move will require member support.

Trend #3 – Higher utility rates

Depending on the market, utilities (water, sewer, and energy) can eat up to 25% of a condominium’s annual budget. Unlike some other items, utility costs are expected to continue going up because of global supply issues and aging power grid infrastructures. Condos located in cold weather climates, including Boston, Toronto and New York, will be hit harder than communities in warmer climates.

The solution

To offset costs, condo buildings can explore renewable energy technology (particularly solar and wind power). The initial costs to purchase and install these new technologies can be a lot, but energy and sustainability incentives from federal or local governments may be available.

Advancements in water-saving technologies, such as low-flow toilets and faucets, efficient irrigation systems, and smart water meters are helping condo communities to reduce water consumption.

There are also little changes, such as LED lights and motion detection sensors, that can be made to help condominiums save a few bucks every month.  

Trend #4 – Upgrades/renovations required to make existing buildings stand out

Considering the current prices of single-family homes, some condo dwellers are happy to stay where they are. Of course, most condo owners would love a bit more space, but there’s not much one can do about that once the building is complete. The next best thing is to offer desirable amenities.

In order to keep owners happy, existing high-rises are looking at what they can do to add value to the property without going over budget.   

The solution

Upscale amenities, such as golf simulators, wine cellars, complete fitness centers, and content creation rooms, can attract and retain high-end owners. Boards are also looking at condo technology that will help strengthen communication, owner support, and package management, while reducing the workload for staff. This is one effective way older buildings can bring modernity to their communities without undergoing major renovations.

Trend # 5 – Tighter labor market

At first glance, a city’s unemployment rate may not seem all that relevant. But a tight job market equates to higher staffing fees. In some locations, young professionals are struggling to obtain employment because older professionals are not leaving the market. The seasoned employees are in a position to charge clients more, and most are raising their fees because… you guessed it, the cost of everything else has gone up.  

The solution

Some high-rise associations are having trouble recruiting or retaining qualified staff members who can provide a high level of service.

Condos must be prepared to offer competitive wages, or find ways to help younger professionals succeed. For example, providing owners with a software management solution can help reduce the workload for condo managers. Owners would have the ability to make online payments, submit service requests and reserve amenities, and most programs allow users to access the software from their smartphones.   

Conclusion

Condo communities must devote time and care when creating budgets for the new calendar year. In most cases, there won’t be reductions in costs for services or items. Owners should be prepared to pay more in assessments, but that doesn’t mean boards can’t look for ways to save money or increase the value of their buildings.