Owners Making Concessions for 'Right' Tenants

LOS ANGELES-With fizzling dot-coms and other tech-related firms flooding the marketplace with sublet space, owners are now willing to negotiate rental concessions for the right tenants, but they’re not giving away the store, say brokers throughout the SoCal region and Arizona.

Chris Cooper, SVP for Jones Lang LaSalle Real Estate in Los Angeles, told GlobeSt.com, that owners are only making concessions for creditworthy tenants, and type of concessions varies according to submarket and owner’s specific financial situation.

For example, in Downtown LA, where vacancy is at 18%–closer to 22% if counting in sublet space–owners may agree to as much as four to six months of free rent and TI dollars up to $45 to $50 per sf. In older buildings, some owners are now willing to foot the bill for upgrades to HVAC systems to land primo tenants, according to Cooper, who notes that until recently that expense would have been subtracted from a tenant’s TI dollars. “Getting landlords to do that as part of a base number, that’s a really big concession.”