The fallout from a combination of the October financial crisis and faltering economy is starting to affect the office space market nationally. With all the layoffs and a stagnate economy employers are laying off workers. This means a reduction in occupied office space. According to Reis Inc., a New York-based real estate research firm more than 19 million square feet of space has been emptied by office users this year, the most since the months after the Sept. 11, 2001, attacks. In New York alone about 1 million square feet of office space is empty.
As vacancy rates have increased, office rents have started to see some slight declines. If the economy continues on this path, we should expect to see a further drop in rental rates. Unemployment and vacancy rates are obviously tied together. If the economy worsens and unemployment increases, we will see even an even greater drop in rental rates to fill the spaces being emptied. Additionally, as large companies who have suffered big layoffs attempt to “get rid” of their leasehold properties, sublease space availability will increase and will become a further downward force on office rental rates.
This is bad news for Landlords, but also presents many great opportunities for Tenants in the market. Tenants will have much greater negotiating power. If you are in the market now, plan to be in the next 12 months, or have a renewal coming up within the next 2 years, it is a great time to start looking at your options. The best way to do that is to make sure and work with a professional tenant rep. There is very rarely any cost to you to obtain their services. Landlords are in the business of renting space. You run your business and are likely only lease space a few times in your business career. Level the playing field with a professional who is on your side and in the office leasing business on a daily basis.General , Office Space