Is Now the Time to Talk?
In the midst of these uncertain economic times and pending national elections, we have found that tenants in Chicago have been hesitant about committing to new office leases. However, rental rates are anticipated to increase due to vacancy rates trending downwards, competition for large blocks of office space, and the groundbreaking of two office buildings in the next couple years. In fact, although Chicago is still considered to be a tenant favorable market, we are beginning to pinpoint symptoms of a tightening, landlord favorable market. Some of the most obvious signs are hikes in rent price and fewer concessions, as landlords are becoming more confident in the pricing leverage they have in the market. This trend has begun to push tenants into early conversations with their landlords as they attempt to secure contracts with lower rental rates and other concessions for the coming years.
If we are all honest, we will admit that leasing conversations and negotiations are the thing businesses would like to avoid the most. It is not uncommon to feel pressured, stressed and just plain annoyed at the looming decisions one has to make regarding real estate—especially when it involves relocation. Yet, as we progress toward a landlord favorable market, it is best to find an office broker you can trust and that has the market knowledge necessary to advocate for you a competitive package. For tenants who have leases coming due in the next 12 to 24 months, now may be the time to initiate conversations with brokers and landlords.