Rental prices negotiations begin as landlords feel pressure of buyer’s market.
New York City, NY, April 20, 2009 – During this down market, commercial landlords are more willing to negotiate new and existing leases. Office and retail leasing activities continue to drop to new lows. Managing agents and landlords are now devoting a large percentage of their time working with existing tenants who are looking to downsize or renegotiate their rents.
Landlords are renegotiating leases to quickly to meet and exceed competitor offerings and customer expectations.
Rents are dropping as the commercial real estate markets react to a decrease in demand while more commercial space is added to the market weekly.
“Even though asking rents have not fallen dramatically, taking rents have dropped,” said Stephen Sunderland, managing director at Optimal Spaces, a New York tenant representative brokerage firm. “There are fewer tenants in the market and if landlords want to complete leases, they have to effectively lower the rents.”
To make the competition even stiffer, Manhattan companies that provide temporary office space are going head- to- head with firms looking for tenants to lease conventional space. The temp space agencies are lowering rents to beat out the competition. Unlike offices on the direct market, which require a 10-year lease, offices that can be temporarily leased or subleased are often smaller, may come fully furnished and offer shorter and more flexible terms. Despite this bad news, leasing negotiations this year have picked up from the near standstill in the fourth quarter of 2008.
The luxury retail downturn is apparent as the Madison Avenue vacancy rate doubled in the last month. Rents are expected to decline and the open spaces will make it possible for new retail labels to make their lines known. Investors and developers feel the strife of retail as Moinian Group and Westbrook, which purchased 475 Fifth Avenue for $162 million and planned to redevelop it, cancelled its plans because they could not find new tenants.
For the latest market research on New York City commercial real estate, contact Stephen Sunderland at Optimal Spaces or visit www.opticalspaces.com. Optimal Spaces releases a monthly analysis of the market including detailed statistics and graphs.
About Optimal Spaces
Optimal Spaces is an industry leader Tenant Representative in office, retail and industrial real estate in the New York Metro market. We represent our client interest, unlike other New York City brokerage firms whose legal duty is to represent landlords. Optimal Spaces provides real estate solutions through consulting, analysis and brokerage services. Optimal Spaces brokers are all experts each with a minimum of ten years in the fields of retail, office, industrial building sales and acquisition. More information about Optimal Spaces can be found by accessing its website www.optimalspaces.com.