Long Term Vacancy leading to Great Leasing Incentives

Posted by admin on April 8, 2009 under Good Info - Read It, by Tim Davis | Be the First to Comment

By Tim Davis

The prolonged slump in the commercial real estate market is leading to some fantastic deals to be had on existing buildings with extended periods of vacancy. Several examples of buildings in the area that are now being offered at radically reduced base rents… (as much as a 50% reduction for the first year) and landlords are making increasingly more lucrative offers to prospective tenants with respect to Landlord funded Tenant Improvements. I have leased industrial space in the last 90 days at base rents that are 30-40% below rates we were asking just 12 months ago. One such deal saw an advertised rate of $7.20 triple net($9.20 gross) end up leasing for $5.85 gross for the first year, and $7 gross for the third and last year of the the 3 year lease term. That is a whopping 37% reduction at the front end of the lease, and 28% of the last year.

The important thing for landlords to remember in this market is that a tenant for 12months at $6, is the same as a tenant for 6 months at $12 per foot. Cash flow and occupancy in these times are king – and deals are being made. As for tenants seeking space, get aggressive, make offers…you may be suprised at how willing property owners and managers are willing to work with you.

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