The Real Deal New York

Commercial market report: Landlords dangle record amounts of free rent

Manhattan’s office leasing market fails to keep momentum from previous months

November 02, 2009 03:20PM
By Adam Pincus

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From the November issue: The amount of free rent that landlords are offering to entice reluctant tenants to sign contracts has hit record levels in the current downturn, despite the fact that asking rents have started to stabilize in parts of the Manhattan leasing market. In the third quarter, two Midtown leases were signed with 17 and 18 months of free rent — double the average of eight and a half months, figures from the most recent report from commercial services firm CB Richard Ellis showed. Some industry professionals said even longer rent-free periods were being negotiated. “For some landlords it may be advantageous to give more free rent [but] with a higher rent [per square foot],” he said. The free rent was just one element of a soft Manhattan leasing market that saw a 1 percent decline in September asking rents. Those rents fell to $50.78 from $51.28 per square foot the month earlier, the CBRE data shows. Average asking rents are now down 29 percent from the peak of $71.92 per square foot in July 2008.

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