Bank Pressure Causes Owners to Drop Rents
Cash-strapped owners and anxious lenders equal lower rent rates and generous concessions, according to participants of a panel discussion sponsored and held by the Las Vegas chapter of the Society of Office and Industrial Realtors.
Owners in the Las Vegas area must generate income or face possible bank foreclosure. With the commercial real estate loan defaults on the rise, property owners are aggressively making deals that include turnkey tenant improvements and free rent. In addition, owners are recruiting brokerage companies with regional and national contacts to help market their office parks and industrial centers.
More product listings mean more choices and competitive pricing. The competition also dilutes the market and keeps the rent rates flat. Tenants are taking full advantage of the struggling market by shopping for new space up to a year or more before their leases expire. Also, tenants are wisely bargain shopping and playing one owner against another to get the best lease terms.
Analysts warn, however, that tenants should be cautious and recognize deals that seem too good to be true. Getting a good deal on the front end does no good if the bank comes in and repossesses the property. “Part of the value of a good deal is a strong owner,” says Soozi Jones Walker, a corporate broker for Commercial Executives. “Whatever you negotiate today, could be gone tomorrow if the bank takes the building back.”