Denholtz is also downsizing tenants early. "I'd rather take space back and lease it to somebody else rather than just reduce a tenant's rent. If I reduce their space by 40%, I can also reduce the rent by 40% and then we both win," says Hurlbut. Still, she continues, there are TI packages that are simply too big. "We recently had a tenant who wanted a 10-year renewal--we usually do three- to five-years--and a TI package; it just got too rich for us," she says, adding that the company is also giving more free rent up front in order to keep the base rent higher."

Meanwhile, Sudler Property Management has taken an extremely aggressive approach to lease up One Continental, its five-story, 500,000-square-foot, class A office building in Cranbury. Rents here are $4.95 a square foot and the firm is also offering turnkey work letters. "Each floorplate is around 100,000 square feet, so we are targeting a large user like an insurance processing company," says Steven Spinweber, executive vice president of leasing. While the company has had "a good deal of interest, nobody's pulled the trigger yet." Although tenants are trying to capitalize on this market, "the decision-makers are also concerned about biting down a big chunk of space when they feel unsure about the economy," he adds.

Spinweber believes we will start to see concessions moderate this year, but it will ultimately depend on the building. "If you have a space that divides into 2,500-square-foot units then you don't need to give as many concessions," he says. "But in our case--when we are asking somebody to look hard at half a million square feet for 10 years--we need to be more aggressive." He adds that it's easier to dig deep for your tenants if there's no mortgage on the building. "We are also somewhat leverage adverse. And we do not use much financing. Most of the time we are looking to pay off debt and hold the buildings."

Still, New Jersey is a cakewalk compared to Florida and Georgia, where Denholtz is also in charge of leasing up properties. "In Orlando we're not even kicking out tenants who want to go month-to-month," says Hurlbut. "We'd rather have the income now." She also explains that the commission structure has increased in the Sunshine State, with brokers upping from 4% to 5%. "Tampa, FL and Tallahassee, FL are okay," says Hurlbut, "but suburban Atlanta property is dead. And in Downtown Atlanta, we are fighting for deals."

The upside of all this may be that landlords are more focused on customer service than ever before. "If it's just about the economics, you lose. But if it's about more then you have a fighting chance," says Hurlbut. "Tenants can get cheap rent everywhere, but you have to be the prettiest show in town." She predicts that 2010 will be more of the same in terms of concessions. "By 2011, the packages will start to decrease, and in 2011 we might see some increase in base rents." But, like most real estate-related indicators, it all hinges on job growth.