As pandemic-led pressures mount for office landlords, they are ramping up offers of free rent and larger tenant-improvement allowances to keep their space filled.
Such concessions rose sharply in Q2, according to CBRE, which reports that there was a 6.6%, year-over-year decline in net effective office rent in the 15 largest US markets. Net effective rent takes into account financial concessions that will be subtracted from a lease's contracted base rent. In comparison, base rent—before concessions—declined by only 1.1% in the second quarter from a year earlier.
CBRE reports that the average length of free-rent periods provided to induce a new lease signing or renewal in Q2 clocked in at 10 months—a 13.7% increase from the first-quarter average.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
