Industry Watchers: Concessions Go Only So Far

This is Part II of a two-part series.

Kiell

Kaufman

Kursman

McCarthy

Jackson

NEW YORK CITY-According to Part I of GlobeSt.com’s two-part series on owner concessions, industry sources agreed with Studley’s 2008 Effective Rent Index Report, which said that concessions are rising. Sources agreed that concessions are directly affected by leasing slowdowns. Those same industry watchers reveal to GlobeSt.com the benefits of offering packages instead of raising rents. They also explain that at some point, owners may be forced to step back and lower rents instead of continuing to offer concessions.

Bradley Kaufman, a partner and leasing specialist in the real estate group at locally based law firm Pryor Cashman LLP, tells GlobeSt.com that owners will step back and lower rents when it looks like the light at the end of the tunnel is not in site. “If a landlord can hold out for six months and the market will head back up, then they do not look to lower rents, however if the landlord feels that we are in it for the long haul or if the sublease market picks up, they might have to rethink things.”

Kaufman further explains that “what you have here is that it is easier for a landlord to increase a concession package than it is for them to lower rent. If you lower asking rents, you have to lower it across the board.”