Only the Shadow knows…

23rd November, 2010 - Posted by Jeffrey S. Weil, MCR.h, SIOR - No Comments

Ken Rosen, who is the Chairman of the Berkeley Fisher Center for Real Estate and Urban Economics gave a recent speech in San Francisco, stating “The U.S. office sector will be the slowest to recover as companies work through empty space and technology reduces their need for square footage.  Unoccupied “shadow space” makes up 5 percent of total business leases, and that space will be filled before firms sign new rental agreements.  Advances such as cloud computing let employees work from home, further reducing space needs.  Every company has shadow space … many U.S. cities face prolonged vacancies because of the surplus.”  Tenant reps such as myself go in 2-3 years prior to a lease expiration and when possible negotiate a downsizing and lease extension as early as possible … this gives the landlord a longer term and saves the tenant rent dollars sometimes as early as 2 years or more prior to the lease expiration.  There is also the possibility of a partial sublet if the excess space is easily sub dividable and even subletting at a deep discount might be far better off financially for the tenant than taking the entire loss.

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Posted on: November 23, 2010

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