The commercial office real estate market seems to have leveled off after a busy 2007, which means an increase in rental rates.
Steve Bach of Bach Real Estate Partners reports that metro office leasing and absorption are both down as of 2007 year end, compared to 2006.
The real vacancy rate, in contrast, is closer to 11.8 percent for 10,000 to 100,000-square-foot buildings.
That has resulted in an increase in average rental rates by 8.2 percent.
Bach attributes the seeming contradiction to new construction costs and higher rental rates as well as to tighter lending deal underwriting requirements and escalating tenant finish costs.
His advice to landlords is to “aggressively canvass for tenants.”
Tenants, on the other hand, “should negotiate win-win deals” taking into account the landlord’s financial constraints.