Office Tenants and Landlords
Office Tenants and Landlords Battle for Upper Hand
Source: nreionline.com
"It has been a tough two years for owners of the nation’s office properties. Since the first half of 2008, office rents and occupancies have fallen at a steady clip. However, there is new evidence that the worst of the fall may be coming to an end.
According to commercial real estate researcher Reis, the national vacancy rate still edged up to 17.4% in the second quarter, compared with 17.3% in the first quarter. The office vacancy rate is now the highest since 1993.
Still, with fundamentals now apparently finding their footing, tenants and landlords are more aggressively positioning themselves to take advantage of the slow but steady recovery."
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Ben is absolutely correct about tenants having the upper hand and concession packages. I recently discovered that a new tenant told a reporter for an article that was published that their main reasons for leasing in one of our buildings were the free rent and free furniture we provided as part of the deal. Of course, all companies are giving free rent these days, but free furniture is not always an option. However, it is becoming very popular at my company.
Although we've had a surge in leasing, new tenants are still looking for a "bargain" and our temants renewing have been negotiating long and hard for deep concessions. We haven't seen any improvement.
Additionally we are also seeing competition from our own tenants who are marketing shadow space at deep discounts. I anticipate we will see this trend through 2011.
I agree with Ben Johnson's statements. It has been a difficult two years and I think everyone's learned to make adjustments finanically and operationally and hopefully we'll get the train out the station soon so that commerical owners and tenants can see profits again and get the unemployed back to work.
- Lori Burger | Flag this comment for review