Equity Office Properties collected $22.8 million in lease termination fees during the first quarter. Although that was up $9.5 million from the first quarter of 2003, it was down nearly 16% from the fourth quarter. Also, noted chief financial officer Marsha C. Williams during the company's earnings conference call Tuesday, $9 million of the first quarter's early lease terminations were the result of two companies deciding against fulfilling their obligations.
Meanwhile, tenant improvement packages and leasing commissions averaged $17.14 per sf during the first quarter, and is expected to range from $18 per sf to $20 per sf the rest of the year, Kincaid added. TI and commissions averaged $21.83 per sf in the fourth quarter, the company noted.
Of the lease renewals being signed by Equity Office Properties, 20% are for less space, 20% are for more space while 60% are staying in the same square footage, Kincaid said. Last year, as many as 40% of the renewals involved contractions, he noted.
"We're not saying things are roaring back, but we are seeing improvements," Kincaid said.
Tenant improvements are less common in lease renewals than they are in new deals, Kincaids noted. "A new deal will always cost you more," Kincaid said. "Our teams understand the net present value of holding an existing tenant, rather than losing them, is very compelling."
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