The DC Market Moves into Version 2.0 of Tenant Concessions
September 30, 2011
By: Erika Morphy

By all indications leasing activity in the DC area is flat. Studley, for example, is getting set to report that for Q3, space availability in the DC metro region remained at 15.1% (exhibiting no change from Q2) and 11.2% for the District (ditto). In Northern Virginia, that number is 18.1%, for an increase of 0.2 percentage points and 15.1% for suburban Maryland, for a decrease of 0.4 percentage points. ...

... Still, tenants do have some leverage, Studley’s Tom Fulcher tells The latest twists, as he calls them, entail incorporating more flexibility into lease terms and negotiating more generous holdover terms.

“What we are pushing for is having more flexibility in a lease--putting in terms that let a tenant undergo an expansion or get rid of space more easily,” Fulcher says. “Especially if a lease is signed and the move in date is far out--being able to drop or pick up space in this environment is very appealing.” ...

... Other tenant trends that research manager Chris Volney sees focus on a continued drive for efficiency--a path that sometimes takes tenants to more expensive buildings. “We see a lot of leases being signed in high end buildings and when you look deeper what you see happening is that these tenants are using the new building as an opportunity to consolidate and make more efficient use of the space,” he says. “They can do that in newer buildings, which tend to be more efficient.”

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