Effective Rent Indexes

Since 1995, Savills Studley has been providing the real estate industry’s only comprehensive, in-depth study of effective rental rate trends and the real cost of occupancy for tenants in the nation’s major Central Business Districts (CBDs) and surrounding suburban markets. The report tracks actual lease terms that reflect negotiated rents and concessions, as well as the costs of maintaining a building that are partially passed through to tenants – operating expenses, real estate taxes and electricity costs.

Every year, our research team examines larger long-term direct deals signed in higher-caliber Class A properties. All statistics in this year’s index are based on larger long-term leases completed during 2017 in existing or newly constructed Class A buildings.

Terminology:

Total (gross negotiated) rent is separated into its key components: net (or base) rent and building expenses (operating expenses, real estate taxes and electricity costs).

• The Tenant Effective Rent Index (the cost of occupancy to the tenant) is derived from total rent less the amortized value of concessions provided by the landlord.

• The Landlord Effective Rent Index (the landlord’s bottom line) is calculated from total rent less costs incurred by the landlord, which include expenses, concessions and commissions.

Megatrends in European Leisure
 

Research search results: 42 found

 
Atlanta (Urban Core) 2018 ERI Report

Atlanta (Urban Core) 2018 ERI Report

May 23, 2018

Tenants faced higher occupancy costs during 2017. Registering its sixth consecutive year of rental rate growth, negotiated rent exceeded $40/sf for the first-time on record. Sustained demand from tech companies and professional/business services kept leasing volume steady. The second half of the year brought some signs that office-using employment was losing a bit of its momentum. Leasing also appeared to be cooling slightly. This may temper rent growth in 2018.

 
 
 
Chicago (CBD) 2018 ERI Report

Chicago (CBD) 2018 ERI Report

April 30, 2018

Businesses in Chicago showed continued willingness to pay record rent for quality space. Much of the new trophy product was pre-leased in 2016.

 
 
 
Houston 2018 ERI Report

Houston 2018 ERI Report

April 30, 2018

Leasing volume in the region rebounded late in 2017 as energy prices started to rise and tenants took advantage of lower rent and favorable terms.

 
 
 
Austin (CBD) 2018 ERI Report

Austin (CBD) 2018 ERI Report

April 25, 2018

Tenants faced higher occupancy costs during 2017 as the region's tech sector fueled steady demand in the CBD. Registering its sixth consecutive annual increase, effective rent for top-tier buildings pushed even higher into record territory. New construction in the Domain will offer tenants another set of high-quality office buildings in an amenity-rich setting, but rent in these properties is also very elevated. Tenants will face higher rent in 2018. 

 
 
 
Dallas (CBD) 2018 ERI Report

Dallas (CBD) 2018 ERI Report

April 25, 2018

Downtown has struggled to land some of the most rapidly expanding firms, but had some success during 2017 as its strong value-plays and improving amenity base attracted geographically flexible companies. Newer buildings along Ross Avenue and in the Arts District have seen stronger demand and are achieving sharper rent growth. Little change is anticipated in 2018.

 
 
 
Dallas (Uptown/Turtle Creek) 2018 ERI Report

Dallas (Uptown/Turtle Creek) 2018 ERI Report

April 25, 2018

Businesses relocating from higher-cost East and West Coast markets continue to show a strong preference for Uptown. They are drawn to its amenity-rich setting, ample nearby luxury retail and residences and growing pool of top-tier buildings. Owners have been able to steadily increase negotiated rent in the last several years and further rent increases are likely in 2018.

 
 
 
Denver 2018 ERI Report

Denver 2018 ERI Report

April 25, 2018

Sustained activity among tech and creative sector firms, combined with a recovering energy sector, boosted demand during 2017. Landlords increased concessions, contributing to a decrease in tenant effective rent. Larger and mid-sized tenants tapped into a deeper pool of space options in Midtown and Uptown, supporting some rental rate growth in these areas that lagged LoDo during 2016.

 
 
 
Los Angeles (Downtown) 2018 ERI Report

Los Angeles (Downtown) 2018 ERI Report

April 25, 2018

Dependency on the legal, banking and professional/business services sectors kept leasing in Downtown Los Angeles from gaining much momentum during 2017. Tenant effective rent pushed above $30/sf in 2017, but is still well below rent in West Los Angeles. The greater Los Angeles economy seems to be losing some momentum and may have already pushed past its peak. Moderating demand should curb rent growth during 2018.

 
 
 
Los Angeles (Westside) 2018 ERI Report

Los Angeles (Westside) 2018 ERI Report

April 25, 2018

Tenant effective rent posted its third consecutive year-on-year increase. Effective rent rose at roughly the same amount as in 2016, but concessions jumped by more than 10%. Tenants displayed additional price resistance during 2017. Some found space in alternative areas such as El Segundo and Playa Vista. Consolidation in the media and entertainment sector could temper leasing activity and rent increases in 2018.

 
 
 
Manhattan (Downtown) 2018 ERI Report

Manhattan (Downtown) 2018 ERI Report

April 25, 2018

The average value of concessions soared to $129/sf during 2017, offsetting a slight increase in taking rent, and causing a 7.8% decline in tenant effective rent to $39.47. Much of the Class A space remaining in Lower Manhattan is priced well above $60/sf. Consequently, any reduction in effective rent in 2018 will be sparked primarily by further increases in concessions.

 
 
 

Key contacts

Keith DeCoster

Director of U.S. Real Estate Analytics

+1 212 326 1023

+1 212 326 1023