Office landlords will be willing to grant you a lot more if you are looking for long-term leases at the cusp of full recovery.
The office sector still can’t rely on clear predictions as to what its future will look like upon reaching herd immunity from increased vaccination. Although asking rents are remaining more or less steady, tenant improvement allowance at a constant, office landlords are starting to yield a little bit more to tenants. Some are offering up to 12-months of free rent as we are beginning to see increases in concessions.
According to CBRE, it’s really more commercial companies that are being granted concessions of up to 12 months of free rent, at this time. They are among the first wave of entities with office needs since retail and entertainment are beginning to reopen.
“Companies seeking long-term leases will find that asking rents haven’t come down much, but overall concessions have increased,” said Whitley Collins, CBRE global president of advisory and transaction services. “Those willing to get out in front of the full economic recovery can expect most landlords to be very accommodating.”GlobeSt.com
Base and net effective rents experienced a drastic dip in Q1 2020 and began to stabilize in Q4, but rent decline margins have been narrowing since Q1 2021. This leads CBRE to suggest that concessions won’t be so easy to come by once the market gets closer to fully reopening.
The demand for office space will be prominent without a doubt, but the question of how companies will return brings hybrid-work to the table, and its prominence.