The real estate owners who have been getting good rents by renting out their properties to offices are in trouble now as almost all the offices are trying to use minimum possible space and reduce their rents.
This has made it easier for other offices to get space on rent now. As per Reis Inc., the New York real estate research firm, the rent of properties for offices increased 0.7% in 2nd quarter, which was a very sluggish rise since the same quarter of 2006, during when ‘office space market’ was coming out from almost a 5 year long fall.
The progress in growth is not so conspicuous due to the inflation increasing 1% in every quarter. Sam Chandan, Reis’s chief economist says, “Landlords have to concede ground on rents and tenant improvements.” He also says, “The balance is tipping in the favor of tenants in many markets.”
The fall in the market for offices and the not so encouraging news about the financial status are indications of the economy not progressing very well. More and more offices have emptied spaces in the second quarter of the year also and this process is called negative absorption. The vacancy rate in the country has increased from 12.8% in the last quarter to 13%.
The rental crisis has affected even the very stable and steady markets. There was a growth in the rent in
This has helped other companies which were able to get spaces cheaper due to all this. Among the 79 markets tracked by Reis, only 17 were able to witness improvement in the rent as compared to inflation. Energy boom helped
There are certain properties which are located a little away from the main city which are facing problems of increase in prices of gas. The employees need to travel more to reach offices and therefore require more gas. There was a slump in the rents by 0.3% in the last quarter in Long Island in
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