Landlords Offer Discounts To Offset Growing Vacancies
Landlords in large cities could continue to see major losses over the next few years despite some companies looking to sign long-term leases.
According to data from VTS, while more companies are keeping their offices, they are downsizing the space as they allow their staff to work remotely for part of the week.
This has led landlords to provide tenants with discounts up to 13% compared to rents during the first quarter of last year.
U.S. office vacancy grew to 11.9% during the first quarter of 2021 according to the report — a surprising result as more Americans receive the Covid-19 vaccine.
That is why landlords are offering rent breaks in order to prevent vacancies from growing anymore, but discounts could drive office building valuations down in large cities.
However, there is still a glimmer of hope. Over 45% of the tenants that are in the midst of negotiating with landlords are looking for commitments of at least seven years, up from 34% in 2019.
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