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.

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Research search results: 42 found

 
Washington, DC 2018 ERI Report

Washington, DC 2018 ERI Report

April 25, 2018

Conditions diverged widely by building quality during 2017. Demand in the very highest-caliber newer buildings was once again very strong. Older properties with outdated space layouts and amenities struggled. Concessions rose along with face rents, as landlords used increasingly generous incentives to lure tenants to their properties. In turn, despite a slight jump in taking rent, effective rent dipped slightly. Tenants should remain in the driver’s seat during 2018.

 
 
 

Little Change to DC Fundamentals, Demand Remains Restrained

June 19, 2017

The first quarter of 2017 brought little change to overall market fundamentals in the DC region. Activity in the District itself dropped considerably compared to this time last year, and while Northern Virginia did see a much needed demand boost from Nestle’s relocation commitment, it is still just a small dent in record-high availability. Tenants coming to market will continue to achieve flexible deals and peak concessions now – and for the foreseeable future.

 
 
 
Atlanta 2017 SERI Report

Atlanta 2017 SERI Report

May 02, 2017

Office-using employment in the Atlanta region posted a solid 3.1% increase during 2016. Class A deal volume in the Urban Core – Downtown, Midtown and Buckhead – totaled 1.8 msf in 2016, compared to 1.2 msf in 2015. Tenants seeking larger blocks of space in Buckhead have a very limited set of options. Landlords in Midtown have also become increasingly bullish as the burgeoning local tech sector expands.

 
 
 
Chicago 2017 SERI Report

Chicago 2017 SERI Report

May 02, 2017

Office-using employment rose by only 1.2% in the region in 2016. The subpar hiring has been offset by continued relocations by suburban companies Downtown. Deal volume exceeded 10.0 msf for the second straight year. Even so, the delivery of several newly constructed buildings has opened up some space options and contributed to a 200 basis point jump in Downtown’s Class A availability rate during 2016.

 
 
 
Dallas 2017 SERI Report

Dallas 2017 SERI Report

May 02, 2017

Office-using employment rose by 4.9% during 2016, but Downtown once again captured only a fraction of the hiring and leasing activity. Leasing activity has gained some momentum Downtown, however, tenants based locally, as well as those relocating from other markets, continued to focus their attention on either Uptown or Far North Dallas. Landlords in most Class A buildings Downtown are capturing sub-inflationary effective rent growth, and several are still undergoing extensive renovations.

 
 
 
Denver 2017 SERI Report

Denver 2017 SERI Report

May 02, 2017

Office-using employment growth was anemic in the Denver region during 2016 as the number of corporate relocations fell and the energy sector continued to contract. The pullback among oil and gas companies was a direct contributor to a 20.0% spike in sublet space. Conditions remain tight in the LoDo and emerging Cherry Creek/Platte River micro-markets. In contrast, landlords lack leverage in the core Uptown submarkets, spurring moderate declines in rent.

 
 
 
Downtown Los Angeles 2017 SERI Report

Downtown Los Angeles 2017 SERI Report

May 02, 2017

Demand for Class A office space in Downtown Los Angeles was tempered during 2016, dropping off from a record year in 2015. Leasing for corporate office space remained dependent on activity among banks, law firms and government agencies – these sectors continue to shed space as they relocate or renew. Most of Downtown’s corporate office buildings consequently achieved rental rate growth that barely kept pace with inflation.

 
 
 
Fort Lauderdale 2017 SERI Report

Fort Lauderdale 2017 SERI Report

May 02, 2017

Tenants continued to have very limited space options in Downtown Fort Lauderdale. Competition for space in the highest-caliber buildings on Las Olas Boulevard remained brisk. New construction activity was negligible, offering little relief to the space squeeze. In turn, landlords pushed base rents higher.

 
 
 
Houston 2017 SERI Report

Houston 2017 SERI Report

May 02, 2017

Deal volume in the region plummeted to 8.8 msf in 2016, well below the long-term average of 12.2 msf. Weak leasing, coupled with a spike in sublet supply, forced landlords to make marketwide adjustments to rent. West Houston and the Energy Corridor posted the sharpest declines, but rents pulled back Downtown as well.

 
 
 
Manhattan (Downtown) 2017 SERI Report

Manhattan (Downtown) 2017 SERI Report

May 02, 2017

During 2016, Class A leasing volume Downtown dropped to 3.2 msf. Tenants took their time reaching space-use decisions. Despite sporadic leasing, rent increased slightly as a significant portion of the Class A space remaining for lease in Lower Manahattan was concentrated in new properties with asking rents in excess of $60.00/sf.

 
 
 

Key contacts

Keith DeCoster

Director of U.S. Real Estate Analytics

+1 212 326 1023

+1 212 326 1023