What office tenants want in today’s economy - Richmond

    Jeff Cooke, SIOR, Senior Vice President in Thalhimer's Richmond Office, provides his thoughts on a recent Wall Street Journal article describing the state of the national office market and how it relates to the Richmond area. 

"The Richmond office market is experiencing much of the same phenomena described in the August 18, 2010 Wall Street Journal article.  The fact that Richmond and Virginia in general are fairing better than other areas of the country is reflected in our overall Richmond office vacancy which was estimated at 11.6% at the end of the 2nd quarter compared to a national rate of about 17.4% cited in the article.  That bit of good news is tempered by examining the transactions taking place in the Richmond market which in many ways are similar to those described around the country.

Richmond is experiencing very little job growth.  The market is feeling the effects of massive job losses (unprecedented in modern times) associated with the shut down of Circuit City, Land America, Qimonda, and Saxon Mortgage.  The relocation of Wachovia Securities also added to the job loss statistics.

The majority of office transactions taking place today are lateral moves and renewals in place.  Tenants are taking advantage of the soft market  to move up to better space, reduce their size, or renegotiate the existing lease by adding a few years and reducing the rate. 

There is also a trend toward reducing the amount of space per employee and creating more efficient, collaborative spaces with more open plans and fewer private offices.  The promotion to the prestigious corner office may disappear along with the corner office. 

Companies are more cost-conscious then ever before and not likely to make a move unless there are clear savings associated with the transaction. Landlords are being asked to provide incentives in the form of free rent periods, extra improvement allowances, and assistance with moving costs. 

If you are an office tenant, this is an excellent time to pull out your lease and see what you can do to improve the bottom line.  With a sharp tenant representation broker at your side guiding the way those savings may be more than you think.  Like all windows of opportunity this one will begin to close someday." 

Read full article here:  Troianovski, Anton.  "Office-Leasing Rebound Could Be Deceiving", The Wall Street Journal, August 18, 2010.

Click here for more Richmond market information: