Lower Pricing, Demand Alter Rent Picture
January 4, 2010
By: Bob Howard

Changing conditions like drastically lower rents here and plunging prices for office buildings in some markets are combining to reshape the rental market. As GlobeSt.com reported recently, many office tenants previously priced out of Manhattan’s Midtown North now find the typically difficult-to-penetrate locale within their reach because of a nearly 50% decline in rents. Weak demand is one reason often cited by brokers for the low rents that landlords now offer in many markets, but other factors are at work too, including the lower prices that some new office building owners are paying for their properties. ....

...  And yet another factor, this one working in favor of tenants, is the effort by landlords to have their property taxes reduced because of declining values. Tenant rep firm Studley recently advised clients that, with building values now down approximately 50% from their peak, tenants should be negotiating lease terms that ensure building owners are passing along their savings when they obtain property tax reductions.

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