Tenants: Now Is The Time To Be In The Market!
March 02, 2012
Office space absorption almost doubled during 2011 vs. year earlier. The expanding office-using job base is responsible for the 70% decline in vacancies in U.S. submarkets. Although office tenants continue to have the upper hand in negotiating terms in many markets, landlords believe that with new construction still on the sidelines, once we get past the fall elections, we will see significant rental rate increases in the following years. Other signs landlords point to include the leveling off in the loss of manufacturing jobs, a bottoming of the housing market which should be less of a drag on the economy going forward, corporate profits are off the charts, and small tenants are back in the market leasing space.
With improving occupancy and little new supply, concessions such as free rent, lease flexibility, and tenant improvements are disappearing in some markets and overall, the long downward slide in office rental rates has likely bottomed. Markets recovering quickly include Bethesda MD, Washington DC, Mid-town Manhattan, West Los Angeles CA, Madison WI, New Orleans LA, Portland OR, and San Francisco CA. Markets that still have significant landlord concessions include Miami FL, Atlanta GA (Buckhead), Baltimore MD, Cincinnati OH, Dayton OH, Detroit MI, Hartford CT, and Phoenix AZ.
Corporate occupiers, if you have lease expirations in the next few years we recommend that you may want to start exploring options. If you would like thought leadership investigating occupancy scenarios please call us.
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