Asking rents for Midtown trophy office towers still haven’t climbed back to their pre-recession peak, but tenant-improvement work letters landlords dangle to get deals done are nearly triple what they were in 2008.
Midtown asking rents for prime Manhattan towers are $107 per square foot, still shy of the $111-per-square-foot peak hit in 2008, according to JLL figures reported by the Wall Street Journal.
Tenant-improvement allowances, on the other hand, were $87.27 per square foot in the third quarter for Midtown trophy buildings, nearly three times the $30 per square foot from 2008, according to JLL.
Demand for pre-built workspace for tenants doing deals in the range of 2,000 to 10,000 square feet is helping to drive tenant-allowance increases, according to JLL’s Cynthia Wasserberger.
“To attract tenants and remove the hurdle to relocating, which is the capital cost to build out space, landlords are continuing to build out space,” she said. ”When one does it, it becomes the rising tide until now it becomes the norm.”
The increase in concessions in the top of the market is indicative of a broader rise across all buildings. Manhattan landlords spent $173 a square foot on free rent and tenant allowances in the first quarter of the year, up nearly 14 percent from $151.93 a square foot in 2015, according to Savills Studley. [WSJ] – Rich Bockmann