Scott Frank, a partner in the real estate practice group in the West Palm/Boca Raton offices of the law firm of Arnstein & Lehr, reports seeing concessions as far down the leasing chain as Class B and C properties, from discounts to tenant improvements to lower security deposits. Frank sees only one remedy: time.
“There’s so much subleasing going on right now at below-market rates,” he said. “The landlords who don’t want to go belly up are going to continue to make concessions for as long as they have to. I imagine we’ll have to wait until the second or third quarter of 2010 to see any improvement. People are going to keep making deals.”
Kleber has a different take. A few Miami-Dade submarkets have seen positive absorption in 2009. Kendall is one of them, with more than 200,000 square feet of positive absorption, a welcome sign in a distressed market. Coral Gables is also faring well, and Kleber expects to see fewer concessions after the first quarter of 2010.
“In the landlords’ mind the perception is they’ve bought enough deals to keep tenants in place or bring new tenants into the building. They’ve weathered the storm and now they are going to sit tight and lay back on some of the concessions to see where they stand,” Kleber said. “Landlords might start to claw back and try to create a more stable environment in which they are doing deals early next year.”