A recent article in Friday Sept 21st’s Columbian revealed that the Bank of Amercia building downtown at 8th and Broadway has had an influx of four new tenants. With a total of 30,000 square feet added to their rent rolls the owners of the property are certain to be pleased with the increased revenues. Broker Tamara Fuller was encouraged by the pick up in activity. However there seemed a fair number of comments within the community that at best this was a shifting of local tenants from one set of spaces to another, and didn’t indicate any fundamental shift in the market.
On one hand they have a point. Several of the tenants did acquire larger space, and there will be an increase in overall space now occupied within the market. We all know that for the market to be completely healthy again, employment levels must increase so that more employers will hire, and hopefully need to expand their space needs.
Let’s remember the market is always in motion. For the past 18 months we’ve seen a steady number of tenants conclude leases they signed back in 2006 or 2007, at the peak level of lease rates. As these expire, and companies evaluate today’s rates, they see opportunities to expand, or upgrade to higher quality properties. They are making decisions to take advantage of these opportunities on a steady basis.
One of the very serious problems the market had in 2009 and 2010 was simply that companies were unwilling to commit to longer term leases. The market essentially froze as companies battled for concessions, extended minimal one or two year terms, and postponed any decisions about possible expanded spaces until their employment plans firmed up.
What is encouraging about the four leases mentioned in the article is that three have seen enough positives within their market places they are willing to make a bet on a longer term future. At minimum this creates activity and income for the brokers involved, some new tenant improvements, some work for moving companies and a series of other local vendors.
So steps in the right direction. We’ll post later this week about how over 20 local companies have Stopped Leasing ! and now Own their Business Property within the last year.