Renewal Rates Will Shock Office Tenants

SAN DIEGO—Local office tenants with expiring leases are likely to have signed their last lease near the bottom of the market, but rental rates have increased more than 17% countywide since then, JLL‘s senior research analyst Josh Brant tells GlobeSt.com. According to Lee & Associates, average asking lease rates in the region moved up in Q3 across all building classes to $29.36 per square foot, a .3% increase for the period. Class-A rents slipped $.39 to $36.77, but in UTC, where the Irvine Company just delivered its new office tower, the average asking lease rate has topped $45 per square foot, and class-B asking rates stood at $27.77, up $.21 for the quarter and $1.83 year-over-year. We spoke exclusively with Brant about office-lease sticker shock and what he thinks the outcome will be.

GlobeSt.com: What’s behind the sticker shock that office tenants will be experiencing once their leases expire?