“It’s finally an even fight” were the opening words of the landlord office broker doing the office market presentation at last week’s CCIM conference. He went on to say, “Landlords look to gain momentum in 2013”. Who dares to utter these words? Brian Gale, who oversees leasing for a 4 million sq ft portfolio for Taylor & Mathis South Florida.
Last week I went to the CCIM Economic Forecast Conference. They hold a half day conference and run through the commercial real estate sector both on a national level and then by product type in a series of presentations by various experts. I have known Brian for over a decade and he knows the office market. His comments are important because of his large office portfolio and the institutional owners he represents. Brian’s team has the ability to turn submarkets in Miami. They found that 2012 began a period of stabilization for landlords. What does he predict for 2013?
- Supply will decrease because there is minimal new construction in Miami
- With limited supply, vacancy will continue to decrease also
- Leasing activity is anticipated to rise along with rental rates
His most chilling prediction for tenants – a 10% increase in rents by the end of 2014. Here’s my 2 cents – he’s right. Landlords are going after all the lease renewals early so they can blend and extend them now. Now more than ever, you need competent representation to guide you through the office lease process whether it is renewal, expansion or relocation. Please contact me so I can guide you through this process.
So if you are a landlord and your rent is going up 10% in 24 months, does blending and extending work in your favor? Presumeably the Tenant would be better off extending out to a 5 year lease and getting other concessions (TI, Free Rent, better parking, signage) today. Right?
Great observation – interestingly, the blend & extend of today is preferred by landlords because they don’t have to compete for the renewal. During 2009-2011, the blend& extend benefited both tenant & landlord. Today it takes someone with good market knowledge to know if it’s truly a win-win.