Leasing covers a diversified territory categorized by product type, geography, size and quality. Most categories in major markets have seen steady absorption during the past 12 months and this should continue through 2013.
The lack of access to capital and financing has compelled businesses to lease rather than to buy. The lending environment and vacancy-driven low rent rates have made it a tenant’s market for several years. However, steady absorption is giving confidence to landlords that the market is gaining strength. This may mean that deal terms may not be as favorable for tenants in 2013. The strongest activity remains in smaller spaces, in quality properties, located in better markets.
As residential markets improve, homeowners will once again see equity that may be used to start businesses, restaurants and stores. This could spell a higher demand for smaller retail space. As consumers continue to spend more online, big box retailers have closed stores and have had to retool their business models to maintain profitability. As a result, developers are getting creative about re-leasing the empty big box locations.
The economy has forced many talented people to start their own consulting, professional or technology-based companies. This will continue in 2013, creating more absorption in primary and secondary office markets.
The general outlook for leasing in 2013 will be steady absorption and increasing rental rates. As confidence builds, vacancy rates drop and the housing market improves, we will see new product deliveries. A new cycle is starting, and it is opening up new opportunities for tenants and landlords to make deals.
Prepared by:
Leasing Product Council Chair
Sperry Van Ness/SVNMA
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