"People are literally giving away cars, trips to Hawaii and gift certificates," Insignia/ESG's Steve Lindley tells GlobeSt.com, referring to the perks being offered by building owners as incentives to brokers and tenants. "The leasing incentives are still out there." And the perks are hotter than ever.
A three-year lease on 5,000 sf at some tony Phoenix addresses like Globe Commons or the Aspen Business Center can get renters a sweet deal on a new car at Berg Ford in Phoenix, confides Carl Johnson, with Johnson & Associates in Scottsdale. Tenants who lease the property and the brokers who negotiate the deal have the option to purchase a 2002 Ford at $500 over dealer cost as an incentive.
But it's not just a sealed deal that is bringing in the perks. Johnson says building owners, eager to have brokers take an interest in their property, are handing out gift certificates to upscale retail stores in lieu of lunchtime get-togethers. "They're doing anything to get brokers out to look at the available space," Johnson says.
The nature of the business is such that the tepid economy has been giving tenants somewhat of an upper hand in lease negotiations. "Where free rent was not considered a year ago, now you can probably get a free month's rent for every three-year term," Johnson says.
Yet despite the perks, tenants are not seeing rental costs drop. "There is some movement, but it's not drastic," Johnson continues.
Still, the hottest of the deals are reserved for buyers. "The leasing incentives are out there but the incentives to buy are out there as well," says Lindley, a part of I/ESG's Phoenix team. With interest rates at their lowest in years, the real smoking deals are awaiting buyers who can own a property for 30% to 40% below today's rental costs, he notes.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
