Office concessions are increasing and are on track to mirror the significant concessions last seen in the Great Recession. Research from Trepp and Compstak found that the spread between starting rents and effective rents has increased 27% in major metro markets, including New York City, Los Angeles, San Francisco/Bay Area, Chicago, Boston, and Washington D.C. In the period following the Great Recession rent spreads increased by approximately 106% for three quarters and peaked 10 quarters following the market trough.

In terms of concessions, landlords' go-to tool has been free rent. Trepp's report uses a recent lease transaction at 28 Liberty Street in New York as an example. The landlord gave an insurance company six months of free rent on a 15-year re-trade lease negotiation. The same is happening in the sublease space. A new tenant at 900 3rd Street Ave. in New York received five months of free rent on a sublease transaction.

These examples are not anomalies. Since the start of 2020, there has been a 30% increase in the ratio of free rent. Today, free rent makes now makes up more than 5% of the total lease term. Again, this is a similar increase in free rent as was seen in the period of 2009 to 2011, following the Great Recession, and provides insight into the significance of this economic downturn.