As reported by a wide variety of media sources and most industry professionals, 2009 will not be a healthy year for the commercial real estate market. Reports here in Indianapolis and across the country are indicating an increase of of available space, falling rental rates and vacancy rates not seen since the early 1990s.
And it's not unique to commercial real estate. Economic conditions of the past year have caused hardship for businesses across the board, as indicated by increased bankruptcy filings and increased unemployment. However, for tenants that have weathered the vicious economic conditions confronting our business owners and managers, there will be no shortage of attractive options available should a lease expiration be imminent.
And it's not unique to commercial real estate. Economic conditions of the past year have caused hardship for businesses across the board, as indicated by increased bankruptcy filings and increased unemployment. However, for tenants that have weathered the vicious economic conditions confronting our business owners and managers, there will be no shortage of attractive options available should a lease expiration be imminent.
And if a tenant's lease renewal is not imminent, many landlords are opening up to very early renewals at substantial discounts for the promise of occupancy until the market improves....commonly known as "blend and extend". The landlord's willingness to blend an existing higher than market rental rate with a lower current market rate in exchange for the tenant's agreeing to extend its lease.
Currently, as part of my work with Carmen Commercial Real Estate, I'm reviewing every one of my client's leases, even those that are not scheduled to expire for 3 or more years from now, to identify opportunities to capitalize on Indianapolis' softer office market. Simply said, there hasn't been a better time to sign an office lease in years.
While the national office vacancy has increased significantly over the past year, most real estate professionals are in agreement that vacancy statistics will worsen at least until the end of 2010. Rents for office space in some of the nation's most recognized markets--New York, Chicago, Atlanta, Dallas, San Francisco, Los Angelos--may be 20% lower than they were two years ago. A drop of this magnitude will send many landlords scrambling and cause a large number of them to go out of business altogether. Adding insult to injury, landlords are getting battered further by highly discounted sublease space that has been added to the market by tenants reducing size or closing offices.
Because of these factors, tenants may be in a position to enter into the most attractive commercial real estate leases in years. However, knowledge is power. Understanding the factors that will allow tenant to negotiate such deals, some of which are mentioned above, are imperative to capitalizing on today's market conditions. Therefore, tenants would be wise to entlist a commercial real estate broker that specializes in representing tenants, such as my firm, Carmen Commercial Real Estate Services, that can bring "real-time" market knowledge to ensure you're able to take advantage of this tenant-favorable environment.
Currently, as part of my work with Carmen Commercial Real Estate, I'm reviewing every one of my client's leases, even those that are not scheduled to expire for 3 or more years from now, to identify opportunities to capitalize on Indianapolis' softer office market. Simply said, there hasn't been a better time to sign an office lease in years.
While the national office vacancy has increased significantly over the past year, most real estate professionals are in agreement that vacancy statistics will worsen at least until the end of 2010. Rents for office space in some of the nation's most recognized markets--New York, Chicago, Atlanta, Dallas, San Francisco, Los Angelos--may be 20% lower than they were two years ago. A drop of this magnitude will send many landlords scrambling and cause a large number of them to go out of business altogether. Adding insult to injury, landlords are getting battered further by highly discounted sublease space that has been added to the market by tenants reducing size or closing offices.
Because of these factors, tenants may be in a position to enter into the most attractive commercial real estate leases in years. However, knowledge is power. Understanding the factors that will allow tenant to negotiate such deals, some of which are mentioned above, are imperative to capitalizing on today's market conditions. Therefore, tenants would be wise to entlist a commercial real estate broker that specializes in representing tenants, such as my firm, Carmen Commercial Real Estate Services, that can bring "real-time" market knowledge to ensure you're able to take advantage of this tenant-favorable environment.
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