The Counterintuitive Commercial Real Estate Market
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05 September 2008
NEW YORK - On the leasing side, a similar trend is playing out. The commercial real-estate market is showing signs of "negative absorption," says Marisa Manley, president of Commercial Tenant Real Estate Representation, a New York City-based broker that advises corporate tenants. That means that more space is becoming available than is being leased or bought. As a result, the law of supply and demand is helping to cut rental rates and creating incentives for building owners to offer tenants additional concessions.
But that doesn't always translate into lower rents. Indeed, landlords are tightening up lease structures, and there's an escalation in the number of clauses finding their way into contracts. In fact, come renewal time, landlords will be working to extract as much as they can from tenants in terms of passing along rising operating costs. Meanwhile, CFOs and corporate real estate managers will be looking for their opportunity to lock-in better long, and short-term deals...
