Rob Hixson, first VP for CB Richard Ellis' San Diego office, tells GlobeSt.com that free rent, per se, is not in the offering in his market, but some owners are giving desirable tenants early occupancy agreements for signing long-term leases of five years or more. This, he notes, amounts to a little free rent from the tenant's point of view. Additionally, Hixon says that owners are more flexible in negotiating rental rates and are giving more TI allowance to tenants with good credit.

The Phoenix market softened slightly during the first quarter of 2001, according to Laurel Lewis, a director at Insignia ESG's Phoenix office, but not enough to cause owners to give away much more than they had before the slowdown. Noting that the area is experiencing an increase in sublet space due to a downturn in the chip manufacturing market, she says, "We're seeing more broker incentives--representing brokers splitting fees with tenants--and a little free rent is entering the market." Lewis notes, however, that tenants can expect to get more TI dollars in new building, about $25 per sf on average, rather than $5 to $10 per sf in an older building.

In negotiating concessions, Cooper suggests that tenants who are sensitive to an owner's specific financial situation will come out best. "Understand what the landlord wants out of the deal," he says noting that new building owners usually have more cash to spend for TI than existing building owners, who are often cash poor, but willing to make other concessions, like free rent and lower rental rates, parking fees and after-hour HVAC rates. "It's silly to waste time and beat on the table if the landlord doesn't have much cash," Cooper adds.