Gothamist: Office Rental Irony of Faltering Economy

NannyState

Wed, 16 Jul 2008 22:34:30 -0500

Another issue is how much higher are rents rising? Two years ago, a rent hike of 20-50% was pretty normative. If rents are rising this year by 5-10%, then, while they are going up, the trend line is flattening. Any landlord will tell you that the key, besides location, is the quality of the building. New Class A rents have to be high to recoup costs, but any greedy owner of a musty Class B building is going to get caught. And those big financials committed to long-term leases. unless they go bankrupt, they have to honor those leases or pay a high price. That space is still occupied, if only by empty desks.

Spiritof76

Wed, 16 Jul 2008 20:13:56 -0500

You'd think so, but I've worked with property owners with ridiculously high vacancy rates who still refused to lower their rents even a bit. I suggested that some rent would be better than none, but they would say that they can't be giving the space away.

eyekantspel

Wed, 16 Jul 2008 12:35:49 -0500

If the rent sought is higher than market, vacancy rates will go up, and landlords will be forced to adjust rates downwards to find tenants.