Falling Rents May Mean Increased Leasing Activity for Remainder of 2009 and into 2010

A recent article in GlobeSt.com highlights that the decline in Commercial Real Estate rents, hasn't kept up with the swiftly increasing commercial vacancy rate, as landlords have largely tried to avoid lowering rents by offering "other" incentives. In our own "unofficial" survey, we are seeing landlords offering everything from a couple of months of free rent, to increased TI allowances, to landlord provided furniture (sometimes existing used furniture, sometimes brand new furniture purchased specifically for the tenant) as an incentive to sign (or hold) tenants.

The article forecasts a decline in asking rents over the remainder of 2009 and into 2010, as Landlords bring rents into alignment with the current market conditions. As rents fall, leasing activity should increase as tenants look for better deals.

The "downstream" impact of this scenario is an increase in opportunities for furniture dealers, architects, and other related goods & service providers, as more businesses change locations.