At the 2023 Lee Summit, an esteemed landlord agency panel consisting of
Carl Awalt
of
The RMR Group
,
Rebel Blackwell
of
Link Logistics
and
Ryan Kehoe
of
Mapletree
shared their thoughts on everything from changing building compositions to uncertainty in building valuation to the challenges of lease term negotiation in today’s environment.
In a discussion moderated by
MICHAEL PLUMB
, we learned that the intricate dance between interest rates and rent growth is on everyone’s mind, along with these other key takeaways related to office and industrial assets:
- Office rents have not seen nearly the rent growth as witnessed on the industrial side, and there’s a huge bifurcation between the well-located, highly amenitized, Class A office building and Class B suburban product
- Must-haves at Class A office buildings include a hospitality-oriented approach, personalized tenant experiences and out-of-the box amenities (liquor lockers, beekeepers and war rooms, anyone?)
- To meet demand for the features that tenants want in the modern workplace, common area factors have gone from 15-20% average to more than 30% as office owners build new or reposition their assets
- Capital markets deal flow on the office side has understandably come to halt, but owners of trophy assets are getting unsolicited inquiries as investors try to emerge from the sidelines— even as there is widespread uncertainty on how to value buildings
- There’s a paradigm shift from the past, where certain provisions were easily agreed upon, to the present, where critical sticking points like renewal options, holdovers, and arbitration provisions have emerged
- In the competition for industrial space, users that are infrastructure-based (cold storage, etc.) take priority for things like renewal options
- Larger, global tenants take their environmental, social and governance (ESG) mandates very seriously and will want information about the carbon output of an owner’s individual asset and entire portfolio
We can’t wait to see how these trends play out in the remainder of 2023!
Principal & CFO Lee & Associates Commercial Real Estate Services
1 年Great Summit this year! Thanks to Jeff and the entire administrative team for all of your hard work and efforts in making this another successful Lee Summit.
Board Chairman & Director. Strategist. Founder & CEO, Akrete: Focused marketing and PR for financial services, professional services and real estate. 2023 Woman of Influence (GlobeSt.com).
1 年The "intricate dance between interest rates and rent growth" indeed! Great insights.