Still a tenant's market
Despite improvements in the office market, most agree that tenants still have an advantage in negotiations because vacancy rates are still relatively high.
"It's still a tenant market, but I will say the concession pool is varied depending on the ownership of a particular property," says Cheri O'Neil, senior vice president and branch manager of Studley, a commercial tenant-representation firm in Tampa.
Companies that cut back during the downturn are starting to add staff to manage their growing business. What's more, their balance sheets have recovered.
"There are a lot of companies that are in a very strong cash position and they have the ability to make some commitments," says Sandelli.
Barring unforeseen calamities, it's not likely rents will fall much further if the economic recovery continues. "The good news is that we're feeling a much greater sense of confidence from the business owners," says O'Neil.
But office vacancies remain elevated, and it's not likely rents will rise until significant space is absorbed. "I think the next 12 months is going to be gradual. We're on the cusp of recovery," O'Neil says.
"Once we start getting down vacancy rate, the rates will start to move," says Sandelli. He adds a cautionary note: "The big question is that this is all based in large part on the economy. "
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