2011 Employment and Your LeaseJanuary 10, 2011
2011 – It’s all about jobs! Blasted across the media is the latest news that unemployment has dropped. Not enough mind you, but it’s moving in the right direction. The economic outlook for 2011 is on everyone’s mind and employment levels come into play even when you’re negotiating in the commercial real estate leasing market.
According to our CT Employment Tracker Report, the top ten job producing metropolitan areas are:
- New York City
- Washington, DC / Arlington-Alexandria
- Minneapolis-St Paul-Bloomington
In general, it will be these markets that see vacancy rates change the soonest as companies expand in size to accommodate their growth. As vacancy decreases, rental rates will increase. Some markets, like those in Arizona, have a long way to go before rents begin to climb but others like Washington, DC have seen a slow but steady increase in office rents over the last year. Take a look at our National Report for more information. The specifics of the market where your company is located will determine the strategy we take when evaluating your current leasing situation.
People have been asking me, “What’s going on in the market? How are businesses making their real estate decisions?” We’ve talked a bit about the market already. In answer to the second part, I have noticed two significant changes in tenant behavior recently.
First, companies’ decision makers are growing accustomed to the uncertainty in the market and hesitating less in making real estate decisions. When we’ve done the work needed and found a property that fits their current/projected needs, decision makers are increasingly more ready to take advantage of the opportunity in front of them. They are locking in the rates and terms available now that will continue to benefit them well into the future.
Secondly, decision makers are beginning to feel comfortable signing longer leases. We’re all learning to make forward looking decisions despite the recent past. This benefits companies because they are able to use their willingness to sign longer leases to achieve even more competitive terms than would otherwise be achievable. Landlords and lenders are looking for secure income over the longer term and savvy tenants who give the comfort landlords are looking for are benefiting their bottom line.