When?
Oliver Petrovic
Executive Director @AY - I solve real estate challenges for occupiers
The gap is widening.
The financial services world has continued to satisfy its appetite in the leasing sector while most businesses wait it out.?Dare I say we’ve seen it all before.?Reluctance and hesitation rarely win, but it depends on what you want.?Everyone is in the risk management game right now.?
The last 6 months I’ve been explaining to executives, either you’re going to have to take a little risk now or sit and wait it out like everyone else.
The leasing barometer has a common theme these days; blue chip businesses absorbing all the headlines with splashy lease commitments;
Long term, big rents, bigger concession packages – all designed as additional incentives to get companies to lease space.?What do the average concession packages look like?
YTD;
$128.00 psf average Tenant Improvement allowances
11.5 months free rent on 10-year leases
Perhaps the bigger item on the horizon is all the Commercial Debt maturing for landlords in the next few years.?Some will be in a position to refinance, most wont.?Valuations and underwriting will depend largely upon occupancy rates which is why we’re seeing every major landlord invest heavily in amenities to lure tenants ahead of time to strengthen their balance sheets:
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Industry chatter suggests a bottleneck of demand over the coming 12-24 months as the market stabilizes and demand slowly creeps up as rates fall, assets trade hands and businesses’ organic expirations occur prompting action.?Between now and then some will take a chance on office plans.?
So what questions am I being asked at the moment?
What would I do if I was making a decision for my business??
Be active and get educated on the market.?Better yet, look at the value (or not) that the office provides as a productivity tool for the business.?If viewed as a critical component going forward, then I’d double down on my commitment (not necessarily size) and seek out the most advantageous opportunities and terms.? If I’m bearish on the 3–5-year window for employee productivity and occupancy, then I’m holding out until that perspective changes or my business suggests otherwise. Either way - get active now.
Inaction isn't the solution but its become an easy de-facto response to this new office environment.
People think brokers are biased, particularly in weak markets as they scramble for any signs of activity.?I’ve always provided data points to support an opinion – that’s what I’m hired for – for my opinion, and to guide businesses through real estate decisions.?My one constant since early 2020 has been for businesses to remain nimble and educated.
There remain bright spots of opportunity for those who seek it and for those well capitalized to commit.?For the rest, it becomes a game of patience and preparation for when the next wave of market activity occurs.?
The continuing unanswerable question…..
When?
OP
questions/topics: [email protected]
High Touch, White Glove Commercial/Consumer Banker with an extensive background in small-middle market business, managing a diversified business banking portfolio.
1 年Great information!
Executive Managing Director at Cushman & Wakefield
1 年Well said, Olly.