Miami, FL (April 5, 2011)  
Companies signing new leases in downtown Miami, Coral Gables and the Brickell Corridor continued to enjoy some of the most tenant-favorable conditions in more than a decade. The recently-released 2011 Studley Effective Rent Index (SERI) shows that occupancy costs were still 30% below their peak levels of three years ago and there was a continued increase in the value of concessions.

"What we are seeing is landlords are continuing to take a very aggressive approach if they want to induce tenants to relocate to their properties," said Studley Senior Vice President and Branch Manager Bob Orban. "Yet, there's no question that the new developments in Coral Gables, Brickell and Downtown have achieved some degree of success because tenants had the sense that terms were not likely to be much more favorable and locked in significant concessions such as signage, generous tenant improvement allowances and rent abatement periods."

The report notes that although terms remained very positive for companies completing leases during 2010, overall leasing activity improved both in terms of volume and quality.

"In contrast to the paralysis of 2009, many businesses were regaining confidence and assuming that the worst of the recession was behind them, and decided that the time to strike on quality space was at hand," said Orban.

This flurry of leasing made landlords in the highest-caliber buildings feel a little more secure as 2010 progressed, prompting them to rein in concessions as the average value of concession packages declined from the record level of $65.85 in 2009 to $53.98in 2010. Even so, the average concession package of $54.00 was still 54.2% higher than the $35.00 mark posted in 2006. Net rents were stable, but the pullback in concessions caused the Miami tenant effective rent index (which measures the cost of occupancy for tenants in higher-caliber Class A properties) to nudge up by 2.5% to $27.32. The landlord effective rent index rose by 18.6% from $12.91 to $15.30. In addition to the decline in concessions, landlords' bottom line rose due to falling operating expenses as insurance premiums have cooled recently.

According to the report, landlords in submarkets that are truly lagging will struggle in the coming years, particularly if they face key loan maturities or significant lease rollovers.

"In many ways this puts landlords and tenants back in the same boat, requiring both of them to come up with long-term strategies dealing with smaller revenue streams and lower operating margins," added Orban.

Orban noted that such a situation will present tenants in these markets with an extended period of favorable conditions. "Landlords may attempt to rein in concessions in 2011, and rents could increase slightly in 2012, but we do not anticipate significant growth in occupancy costs for tenants in the short-term," he concluded.

The 2011 SERI Report is available at