Companies in the market for office space are failing to find rock-bottom rent deals, even as landlords face a wave of maturing debt and rising market vacancy.
Instead, tenants, who still want shiny new spaces that will lure employees back to the office more often, are turning to landlords who have the capital to fund tenant improvement allowances, even as they are paying near-record-high rents, panelists said during Bisnow’s Atlanta office event last week.
Bisnow/Jarred Schenke
Highwoods Properties’ Heather Lamb, Technogym’s Stacy Connell and Humphries & Co.’s Scott Moore at Bisnow’s Atlanta office event Thursday.
“It’s all about talent. It’s all about trying to recruit the best talent,” Highwoods Properties Senior Vice President Heather Lamb said at the event, held at the Crowne Plaza Atlanta — Midtown hotel. “[Tenants] are not really too concerned about the price point that they’re paying for the real estate. They want to provide an environment that is conducive for their talent.”
In past real estate cycles, landlords dropped rents to induce interest among a dwindling pool of prospective office tenants. That hasn’t happened yet.
Atlanta-area office rents climbed in the third quarter to $30.53 per SF, up from just over $30 per SF during the same period in 2022, according to CBRE. Those rents have climbed even as the rate of office space available in the market hit a new record at 30.7%.
The war for talent has placed the Atlanta office market on odd footing: Because of the higher build-out costs for office space, landlord margins are getting squeezed, which is only adding to their…
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