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For Tenants, It's About Shaving Costs

NEW YORK CITY-Corporate tenants are rethinking their space requirements in the downturn, but not all the changes are cyclical, JLL researchers said Wednesday.

By Paul Bubny | Updated on December 16, 2009

NEW YORK CITY-”Cost cutting is still going to be the highest priority” for corporate real estate in 2010, Peter Riguardi, president of Jones Lang LaSalle’s New York region, said in a webcast on office occupier trends Wednesday afternoon. That’s because economizing remains a watchword for many companies, and reducing real estate expenses–whether through blend-and-extend leases or outright shedding of space–represents low-hanging fruit.

Blending and extending, which has come back into favor in the current leasing market, will remain a big trend for the foreseeable future, Riguardi said. It’s one of many opportunities for tenants in these days of reduced rents and greater landlord concessions. The current climate also offers plenty of chances for upgrading the location and the space, and for using market leverage to enhance non-economic lease provisions.

At the same time, the financial stability of owners at both the entity and property levels will remain a focus for tenants. That being said, Riguardi pointed out that about 100 Manhattan office properties suffer from shaky financing, but there haven’t been nearly as many foreclosures in 2009 as might have been predicted a year ago, due largely to reluctance on the part of lenders.

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