Many landlords try to justify high asking rents by pointing to the starting rents in lease comparables but for tenants it’s important to know the full picture and ask questions. How much free-rent and tenant improvement dollars did the landlord give? The answer is likely a lot – especially for longer term leases. On top of increasing concessions, year-over-year market average asking rents fell $5.72/SF. And, the average market vacancy rate continues to climb, reflecting a 6.5% increase year-over-year, up to 28.1% for the quarter.
The market is experiencing an uptick in activity, especially for requirements under 25KSF. Currently, 79.2% of all requirements fall within this segment. Expect increased competition for smaller, high-quality space, as demand for the highest quality space remains strong resulting in an extremely competitive environment. These spaces can also command premium rents at elevated or equal to pre-2020 rates.