Office Concessions Are Here But Maybe Not for Too Long
But this tenant-friendly environment will likely only last for the next 12 to 18 months, says CBRE’s Spencer Levy.
August 25, 2020 | Erika Morphy | GlobeSt.com
As pandemic-led pressures mount for office landlords, they are ramping up offers of free rent and larger tenant-improvement allowances to keep their space filled.
Such concessions rose sharply in Q2, according to CBRE, which reports that there was a 6.6%, year-over-year decline in net effective office rent in the 15 largest US markets. Net effective rent takes into account financial concessions that will be subtracted from a lease’s contracted base rent. In comparison, base rent—before concessions—declined by only 1.1% in the second quarter from a year earlier.
CBRE reports that the average length of free-rent periods provided to induce a new lease signing or renewal in Q2 clocked in at 10 months—a 13.7% increase from the first-quarter average.
