{"id":1004225127,"date":"2018-04-27T03:13:42","date_gmt":"2018-04-27T11:13:42","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004225127"},"modified":"2022-12-08T20:16:53","modified_gmt":"2022-12-09T04:16:53","slug":"savills-studley-office-report-shifting-concessions","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/savills-studley-office-report-shifting-concessions\/","title":{"rendered":"Savills Studley Office Report: Shifting Concessions"},"content":{"rendered":"

By Barbra Murray<\/em><\/p>\n

\"Keith<\/a>

Keith DeCoster, Savills Studley<\/p><\/div>\n

In the Class A segment of the U.S. office sector, coveted concessions abound\u2014for some, according to commercial real estate services firm Savills Studley\u2019s 2018 Effective Rent Index. New developments and repositioned properties have produced plentiful supply in some gateway markets, and landlords are responding with special deals in an effort to lease-up properties. However, the limited pool of premier offerings in tech hubs is having a converse effect, with concessions on the downswing and prices on the rise.<\/p>\n

Per the Savills Studley report, tech firms are willing to pay big-ticket prices for space, particularly cutting-edge space. \u201cTalent and quality office space both come at a high price, even in many of the markets such as Atlanta and Dallas where developers used to be guilty of overbuilding nearly every cycle,\u201d<\/em> Keith DeCoster, director of U.S. Real Estate Analytics with Savills Studley, told Commercial Property Executive<\/em>. Atlanta\u2019s tech sector accounts for an increasing percentage of the employment market, and the city experienced the largest upsurge in effective rents of the 20 major metros surveyed and the greatest drop in concessions; rents climbed 12.7 percent in 2017 and concessions dropped 4.1 percent. In Silicon Valley\u2019s Sunnyvale\/Santa Clara area\u2014home to the likes of Apple, which occupies the entire 350,000-square-foot Crossroads III office campus<\/a>\u2014rents rose 3.8 percent, and concessions dropped 3.2 percent.<\/p>\n

It\u2019s a different world, however for tenants in markets where tech isn\u2019t king. \u201cTraditional professional\/business services firms and law firms are still keeping an eye on out-of-pocket expenditures,\u201d<\/em> DeCoster said in a prepared statement. \u201cFortunately, ample supply in many of the gateway markets is compelling landlords to offer record concessions, making conditions ideal for tenants.\u201d<\/em> Concessions packages skyrocketed 21.7 percent in Washington, D.C., and tenant effective rents in the nation\u2019s capital dropped 1.5 percent. The same dynamic can be seen in Denver, where concessions rose 16.7 percent and rental rates dropped 2.8 percent.<\/p>\n

Overall, 12 of the 20 cities analyzed in the report recorded an increase in concessions and a decrease in tenant effective rents.<\/p>\n

Unexpected results<\/strong><\/h2>\n

The tech industry\u2019s strong impact on the Class A office sector is a trend seen in previous Savills Studley Rent Index reports<\/a>; however, the 2018 report did yield a few unanticipated results. \u201cTwo things are surprising<\/em>\u2014the sustained levels of demand for premium office space and the continued development restraint. Both may be attributable to rising costs,\u201d<\/em> DeCoster told CPE<\/em>.\u00a0 In the central business district of Tampa, Fla., consistent leasing activity along with controlled construction pushed tenant effective rents up 10.3 percent in 2017. The same dynamic is evident in Phoenix, where constrained development and sustained user demand caused rents to jump 13.2 percent.<\/p>\n

Change, however, may be on the horizon, according to the Savills Studley report. \u201cDemand is already starting to wane in a few markets,\u201d<\/em> DeCoster noted. \u201cIt will be interesting to see if all markets stick to their controlled development pipelines.\u201d<\/p>\n

Image courtesy of Savills Studley<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Per the firm\u2019s 2018 Effective Rent Index, rates continue to increase and concessions remain on the downswing in tech-centric cities, while markets dependent on traditional users experience the opposite.<\/p>\n","protected":false},"author":969,"featured_media":1004225154,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21784,21808,23891,21742,21747],"tags":[32775],"class_list":["post-1004225127","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brokerage","category-featured","category-national","category-latest","category-office","tag-savills-studley"],"acf":[],"yoast_head":"\nSavills Studley Office Report: Shifting Concessions - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/savills-studley-office-report-shifting-concessions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Savills Studley Office Report: Shifting Concessions\" \/>\n<meta property=\"og:description\" content=\"Per the firm\u2019s 2018 Effective Rent Index, rates continue to increase and concessions remain on the downswing in tech-centric cities, while markets dependent on traditional users experience the opposite.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/savills-studley-office-report-shifting-concessions\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2018-04-27T11:13:42+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-09T04:16:53+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2018\/04\/Keith-DeCoster-Savills-Studley.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Barbra Murray\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/savills-studley-office-report-shifting-concessions\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/savills-studley-office-report-shifting-concessions\/\",\"name\":\"Savills Studley Office Report: Shifting Concessions - 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