Handful of Leases Boosts Suburban Occupancy
April 5, 2010
By: Eddie Baeb

A smattering of big leases in the first quarter lowered the suburban office vacancy rate, ending a five-quarter run of rising rates because of downsizings and lack of demand.

The overall vacancy rate, which includes sublease space, dropped to 22.8% from 23.7% in the fourth quarter, according to a new report by Studley Inc. The first quarter’s rate is up almost a percentage point from a year ago, when it was 21.9%.  ...

... Studley’s report says a 10-year suburban lease for more than 50,000 square feet now includes on average 10 to 15 months of free rent and tenant-improvement allowances of $45 to $50 a square foot. ...

... The market conditions are making things particularly hard on the owners of older buildings that don’t have top-tier locations or amenities. Those Class B and sub-Class B buildings, which Studley says make up half the 110-million-square-foot suburban office market, often can’t lower their rents enough to compete with the discounted Class A buildings. ...

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