Also, the average rental rate is at $4.20, compared with $4.96 a year ago. Vanino says as far as the "big picture," tenant retention remains the No. 1 priority of landlords. Tenants continues to have strong negotiating power, even as lease rates are stabilizing and leasing activity is improving, he says.
For flex space, he's projecting the direct vacancy rate at 13% from 12.5% last year and the average rental rate at $7.54, compared with $7.84 per sf a year earlier. But perhaps the brightest spot is the turn around in absorption. This year, he's projecting the market will absorb 950,000 sf, compared with negative absorption of 440,000 sf last year. At the same time, construction is slowing. He's projecting 1.7 million sf of new construction this year, compared with 1.8 million sf last year. That is the smallest amount of construction in recent memory.
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