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: 43 found

 
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.

 
 
 
Manhattan (Midtown) 2017 SERI Report

Manhattan (Midtown) 2017 SERI Report

May 02, 2017

Despite subpar leasing activity in Midtown Manhattan, total rent pushed nearly back to peak levels. A high number of leases completed in trophy buildings, including a flurry of leases in Hudson Yards, boosted rent averages. Rent was showing some signs of sliding lower late in the year, though, as availability in the Plaza District and Grand Central increased significantly. Additionally, record concessions offset the increase in base rent, keeping landlord effective rent flat.

 
 
 
Miami 2017 SERI Report

Miami 2017 SERI Report

May 02, 2017

South Florida’s recovery maintained momentum in 2016. Office-using employment rose by 3.0% in Miami-Dade County, compared to a 1.8% increase in 2015. Class A deal volume totaled 1.2 msf, the second straight year with activity in excess of 1.0 msf. Sustained activity, coupled with negligible new construction, contributed to incremental rental rate growth over the course of the year.

 
 
 
Northern New Jersey 2017 SERI Report

Northern New Jersey 2017 SERI Report

May 02, 2017

The Hudson Waterfront registered steady activity during 2016 with a sustained flow of leases. Relocations among suburban firms, plus a few deals by Manhattan firms, headlined the activity. Newark in contrast, has not maintained momentum. Owners in Jersey City and Hoboken boosted rent a bit; however, effective rent remained a bargain compared to Manhattan.

 
 
 
Northern Virginia 2017 SERI Report

Northern Virginia 2017 SERI Report

May 02, 2017

Tenants remained cautious during 2016. With ample space options and an availability rate exceeding 25.0%, companies had little reason to rush their leasing decisions. Deal volume totaled 7.8 msf during 2016, falling well short of the long-term annual average of 10.1 msf. Effective rent still increased as most leases involved a flight to quality.

 
 
 
Orange County 2017 SERI Report

Orange County 2017 SERI Report

May 02, 2017

Orange County registered another year of steady demand from a diverse set of industries. Mortgage lenders, software and gaming firms, as well as general professional/business services firms were aggressive. The shortage of big blocks of space has kept demand very competitive. Companies have so far been willing to pay record rent at the Irvine Spectrum Center and Fashion Island and creative office space conversions have also been seeing steady activity.

 
 
 
Philadelphia 2017 SERI Report

Philadelphia 2017 SERI Report

May 02, 2017

Steady demand among a diverse set of firms, coupled with controlled new construction kept availability well under 15.0%. Pre-leasing at Navy Yard continued to gain momentum. Class A leasing volume in Center City totaled 1.9 msf in 2016, down slightly from 2.3 msf in 2015. Even so, conditions tightened and landlords pushed base rents higher.

 
 
 
San Diego 2017 SERI Report

San Diego 2017 SERI Report

May 02, 2017

Leasing volume in Downtown San Diego was sustained, totaling 1.2 msf. Demand was driven largely by a handful of larger leases, but activity among smaller and mid-sized firms improved as well. In turn, effective rent made its first material increase in several years.

 
 
 
San Francisco 2017 SERI Report

San Francisco 2017 SERI Report

May 02, 2017

The sharp pullback in the IPO market and frequent down-rounds (devaluations) of many tech firms clearly impacted leasing activity and hiring during the first half of 2016. Many companies had to roll back expansion plans, a few cut payroll and shed excess space. Nevertheless, rent rose as a handful of deals in the very highest-caliber properties boosted averages.In order to achieve these higher rents landlords significanlty increased tenant concessions.

 
 
 
Silicon Valley 2017 SERI Report

Silicon Valley 2017 SERI Report

May 02, 2017

Demand for space finally found some limits during 2016, particularly in the second half of the year. Downtown San Jose captured a few notable leases, but leasing activity was not as brisk as in Mountain View, Sunnyvale and Menlo Park. Some of the new buildings already underway, as well as proposed properties ended 2016 with quite a bit of space remaining for lease. Even so, effective rent rose as landlords remained confident.

 
 
 

Key contacts

Keith DeCoster

Director of U.S. Real Estate Analytics

+1 212 326 1023

+1 212 326 1023