Office concessions are increasing and are on track to mirror the significant concessions last seen in the Great Recession. Research from Trepp and Compstak found that the spread between starting rents and effective rents has increased 27% in major metro markets, including New York City, Los Angeles, San Francisco/Bay Area, Chicago, Boston, and Washington D.C. In the period following the Great Recession rent spreads increased by approximately 106% for three quarters and peaked 10 quarters following the market trough.

In terms of concessions, landlords’ go-to tool has been free rent. Trepp’s report uses a recent lease transaction at 28 Liberty Street in New York as an example. The landlord gave an insurance company six months of free rent on a 15-year re-trade lease negotiation. The same is happening in the sublease space. A new tenant at 900 3rd Street Ave. in New York received five months of free rent on a sublease transaction.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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