New Projects Demand Higher Rental Rates - Winter 2003

For almost two years, office vacancy rates have steadily increased while rental rates remained the same, or in some cases even decreased.  Contributing factors:  the recession and general lack of confidence in the economy.   Fortunately, we are starting to see a flicker of hope as leasing activity has increased and developer confidence is evidenced by new projects being planned.  The four planned projects downtown and near the hospital are “asking” office/retail rental rates of $22 -$29 per square foot triple net compared to current triple net rates of $14-$18 per sq ft.  While a few existing buildings are commanding similar rates, this is a threshold in our office market.  New product always demands higher rates and given the age of our existing office supply, the new rates may not be a stretch.