"Many tenants 'forward-leased' space before it was even available. And then that company's growth plans changed, so whoever subleases that space will get a concessions package in terms of whatever that former tenant already paid for, as far as insurance, etc.," says Bruce Rothman, managing director at Julien J. Studley. "And we have seen significant subleasing activity, especially with the trouble in the dot-com sector and other companies experiencing growth shifts." Rothman points to a large sublease deal--33,000 sf-- negotiated on behalf of Lazard Freres at 600 Fifth Ave. as evidence of this.

"Owners want to lock in the deals they can make today, while tenants want to make sure they know exactly how much space they really need, and if the price is fair, given the downward slide," says Brian G. Schwagerl, senior manager of facilities planning at the Hearst Corp. Emden adds that he has seen decreases in rent as well as concession offerings.

"Concessions are worked out with tenants on a case-by-case basis," says Bruce Rothman, "Owners are holding tight to their asking rents and increasing concessions in an attempt to preserve asset value," he says. "Concessions are sometimes necessary to attract and sustain asking rent. They're offered in a way that reimburses a tenant, like a construction loan." Rothman says he has not yet seen owners themselvesoffer much in the way of these kinds of concessions, "but they make up for it in free rent."

"Timing is everything," says Schwagerl. "Owners want to get deals done as quickly as possible now before we see an even greater softening of numbers. Good credit-worthy tenants will be offered a work letter in the neighborhood of $25 to $30, construction time, and as many as four months free rent."

Emden is quick to point out that although concessions are out there, tenants have to ask for them. So this may be the time for credit-worthy tenants to play "let's make a deal" for the first time in several years.

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