Office Space Rents Still Declining
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January 8, 2010 WSJ - The office market in Washington, D.C., is poised to topple New York as the nation's most expensive, reflecting the declining fortunes of the nation's financial center and the government expansion under way in the U.S. capital.
Rents declined in almost all of the 79 American cities tracked by Reis Inc., a New York based-research firm, in the fourth quarter of 2009. The largest fall was in New York, where average effective rents -- or the net amount tenants pay after landlord concessions -- fell nearly 20% to $44.69 per square foot annually. It was the sharpest decline in rents ever recorded by Reis since it began compiling data in 1981.
By contrast, average rents in Washington were $41.77 per square foot, down 3% annually. Reis estimates that by the end of this year, rents in New York will come down to around $41.07, slightly below their estimates for Washington of $41.27.
Have you seen any ads for sublease office space on MySpace?
Don’t be surprised if you do. MySpace
has around 420,000 square feet of office space in Playa Vista, California with
a 12 year lease that is sitting empty. They are currently paying more than $1-million
dollars a month for the Los Angeles area office space and have total lease
obligation of about $350-million over the 12 year term. Rent is scheduled to go
up to nearly $2-million next June. Needless to say, it is not a great time to
have excess office space, especially true in California.
