At the beginning of the year Grubb & Ellis predicted that Seattle "landlords will continue to have trouble finding major tenants in 2002." Nevertheless, corporate tenants signing new leases here are getting a substantial break to the bottom line in the form of rents in comparison to previous years.
The Grubb & Ellis/Frank Knight study ranks the selected markets from the most to the least expensive and compares costs between the fourth quarters of 2000 and 2001. Calculations were based on average annual rents, plus the "typical expenses" borne by tenants—such as the costs of common maintenance.
In Seattle's prime office sector, average annual occupancy costs dipped 14.1% from the fourth quarter 2000's $36.45/sf to $31.32/sf during the same period 2001.
Looking forward, Grubb & Ellis predicts that local landlords "will continue to have trouble finding major tenants" in 2002—a year which will see in excess of 3.4 million sf of new space come one line. And, rents will continue to fall.
Grubb & Ellis' local experts believe the emptying of the construction pipeline over the course of the year will set the stage for an economic recovery beginning sometime next year and in 2004. The firm's 2002 predictions also include continued layoffs in technology and telecommunications. However, it advises landlords could see payoffs by targeting tenants in traditional business sectors, which it expects will grow over the course of the year.
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