Tuesday, March 24, 2009

In Ohio, Office Tenants In Stronger Position As Vacancy Rates Climb

This is not necessarily being repeated all over the United States, proving the adage that all real estate is local, local, local.

However, in much Ohio, particularly Central Ohio, office tenants are being offered significant opportunity for better renewal rates, being wooed to new office space, or even renegotiating existing leases. Depending on where you are, your economy and the amount of product available (leaseable space) dictates availability and per square foot rents.

When it comes to new space and early lease renewals, renters are in the driver's seat. Moreso in fringe areas of Columbus and suburbs where isolated office buildings that were to be the anchor for further development are, well . . . still isolated and often empty.

Unlike multifamily investment in the area, which is stable and lacking all the giveaways we used to see (free washers and dryers, free microwaves, free this free that for signing a lease), office owners are offering a number of incentives to get businesses to locate in their properties. This includes free rent for a certain number of months at the beginning of the term, low base rents and increases in amenities.

According to Schenk Company Inc., which represents tenants exclusively, in Central Ohio vacancy rates ranged from a low of 15 percent in southwest Central Ohio, to 15.1 percent in the central business district of Columbus, to highs of 23.9 percent in outlying (what I call fringe or edge) areas. Southeast Central Ohio had the highest office vacancy rate at 25.1 percent.

The key is knowing where you want to locate or expand your business. Pretty much everyone, with the exception of office operators who have high occupancy rates, is willing to be creative. Your experienced commercial/investment real estate agent can help you move through the minefield in tenant representation, and prevent office renters from making mistakes that could cost them later.

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