Bisnow: Now & Then

The Now and Then Chart is comparing the averages of major factors in the lease, such as starting rent, tenant improvement allowance and free rent. The comparison is done both across submarkets and in two different points in time, using data from the CompStak database. Our current focus on Midtown and Midtown South in Manhattan shows that office starting rents in Midtown have been on the rise over the past few years but not have not yet reached their highs of 2008. On the other hand, Midtown South has seen starting rents increase above 2008 price levels. While this conclusion is not exactly new, the striking difference is just another peek at what the housing bubble looked like in the leasing world, and how well Midtown South is fairing with the current explosion of the tech industry.

Another interesting aspect of the same phenomenon can be seen by looking at concession levels. At the height of the market in 2008, landlords were much more stern on their asking rents and were not willing to negotiate much by padding tenants' pockets with concessions such as tenant improvement allowance or free rent. It was more a "take it or leave it" type environment. In 2013 however, landlords have changed course and are offering TI's at more than 2.5x what they were offering in 2008. Market dynamics have changed and landlords can no longer sit on their hands at the negotiation table.

Regina Glick

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