The new lease, the details of which West, Lane declined to provide, saved the non-profit millions over the terms of the lease, which will run 13 years. "Right now the market is very favorable to tenants, to say the very least," West tells GlobeSt.com. Indeed, the DC-area rental market has reached a tipping point for many tenants that only a short while ago had decided to hunker down in their current space.
"We have reached a point where it is just as cost effective for a company to move and take advantage of locking in lower rental rates," West says. Lower construction costs and generous TIs are the reasons why that equation has shifted for many, he says.
One quantitative measure of these dynamics comes from the Studley Effective Rent Index, which found that the value of concessions packages spiked from $60 to $70 in 2008--the largest annual increase in more than a decade. The strong tenants' market is no doubt going to continue until at least the end of the year. More buildings in DC are expected to fall under distress and even return to lenders, further softening landlords' positions. Built in 1985, 2121 Crystal Dr. was renovated in 2006. It is close to 90% occupied.
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