Concessions Continue to be Significant in Office Lease Deals
Lease concessions which are typically given in the form of rent abatements and furniture or improvement allowances at the landlord’s expense are not likely to be disappearing anytime soon. Recently released findings of executed direct office leases above 20,000 square feet with terms of at least seven years made between April 2020 to the present revealed that on average up to 24% of rent throughout the lease term is being lost by landlords of Class A office properties due to rent concessions, representing a 40.3% increase of the 17.1% average before COVID (2018 to March 2020). In contrast, trophy buildings, which are a tier above Class A, have fared slightly better, the average rent loss increased about 16.3% during the same period, rising from 17.2% to 20.0%; while Class B/C concessions saw a 37.7% increase from an average of 15.4% to 21.2%.