While searching for office space in west Plano on behalf of a software development company, I noticed that rental rates have gone up considerably. Class A office buildings are now quoting rates in the upper half of the $20’s plus electric.
My favorite office building is Granite Park III which is quoting a whopping $29.50 plus electric. Many others are in the $26.00 range. Most class B buildings are over $20.00 plus electric.
So while the media is still sounding the alarm about how bad the economy is, landlords are quietly raising rental rates, reducing the amount of free rent they are giving and taking away other concessions.
Another landlord refused to give a renewal option on a 6,000 SF tenant. That’s a first for me. Another didn’t want to provide any improvements to the space for a renewal other than paint and shampooing the carpets. A third pulled its proposal saying that we waited too long and rates were going up. He also said they wouldn’t do a 3-year term. It’s 5 years or longer. Period.
What should a tenant do?
If your lease expires in the next 12 – 18 months, you should talk to your corporate real estate advisor (and that should be REATA, of course) to discuss the possibility of renewing early if you like the building you are in. While the rate may be higher than you are paying now, it may not be as high as what it will be if you wait until your expiration date.
Please call me if you would like to discuss this further.