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Tenant Retention is the Landlord's Mantra
"This is a critical time for users to be analyzing their leases and evaluating opportunities for restructuring to reduce their occupancy costs now and in the future,” says Ed Hoel, Managing Principal of CresaPartners greater Raleigh-area office.
CresaPartners also reports that the national economic malaise is definitely impacting commercial real estate in the Triangle region. Vacancy rates are moving higher, investment activity has all but stopped and new construction is at a standstill. The overall office vacancy rate increased by 1.1% to 13.9% and net absorption for the 1st quarter was a negative of 100,000 square feet.
Unemployment and vacancy climb together
The Triangle area unemployment rate jumped to 8.3% in February and is expected to go higher for the next several quarters. The office vacancy rate continues to climb as well, from 12.8% to 13.9%. Our expectations are that the vacancy rate will increase another 2% to 3% over the next several quarters. Available sublease space will continue to grow.
Critical for tenants to analyze their leases
Tenant retention is the landlord’s mantra in this competitive market. While we have not seen asking rental rates being adjusted significantly, landlords are offering more and more concessions to attract new tenants and to keep the ones they have. In these tough economic times, corporations are under great pressure to cut expenses and occupancy costs are a major component on their operating statement being scrutinized. This is a critical time for users to be analyzing their leases and evaluating opportunities for restructuring to reduce their occupancy costs now and in the future, as well as improving alignment of their real estate to their businesses. In today’s market, it is increasingly important for tenants to consult closely with their real estate advisor to develop a solid strategy and to take full advantage of the market dynamics.
Major Transactions in the Raleigh-Durham Q1
Turnkey Millwork – 45,000 SF – Industrial Lease
Graebel Companies – 40,000 SF – Industrial Lease
ClinForce – 38,000 SF – Office Lease
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CresaPartners is an international corporate real estate advisory firm that exclusively represents tenants and specializes in the delivery of fully integrated real estate services, including: Transaction Management, Project Management, Relocation Planning and Management, Strategic Planning, Workforce & Location Planning, Subleases and Dispositions, Lease Administration, Capital Markets, and Facilities Consulting. With more than 50 North American offices, CresaPartners is the largest pure tenant representation firm in the U.S. and Canada. Through a partnership with Atisreal international real estate group, CresaPartners is a member of one of the leading real estate organizations in the world, covering 35 countries. For more information, visit www.cresapartners.com.