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1997?s Occupancy Cost Outlook: Tightening Markets, Rising Rents


It?s enough to make your accountant cry — now it?s the landlords who?re smiling.

Particularly in the USA, long gone are the days of the late ?80s and early ?90s, when many markets were awash in surplus office and other space, and landlords were practically begging corporate tenants to sign on the dotted line. In 1997, companies will face a very different situation. Even in parts of the bullishly growing Asia-Pacific, vacancies are dropping, rents are rising and landlord concessions are drying up. In short, the pendulum of supply and demand is again tilting in favor of sellers.

Palm Tree

Site Selection?s 1996 survey of thousands of business parks around the world reveals an overall real estate market that?s continuing to tighten in many locations. Major findings include:


  • Only 12 percent of park officials say ?substantial rental concessions? are common in their areas for new business park tenants. That percentage has been declining steadily since 1991, when 33 percent of park managers reported that substantial concessions were common.
  • Park officials who say the value of rental concessions in their areas is now lower than it was a year ago outnumber by more than 2-to-1 those who report higher concessions.

  • Revived real estate markets are driving up land prices: Some 40 percent of park managers say land prices and lease rates will rise in 1997. Only 2 percent think costs will go down.
  • But there?s a supply-side finding that will boost buyers? bottom-line prospects next year: Construction of speculative industrial and office space is on the rise. In fact, 28 percent of respondents say their parks built spec space during the past 12 months, and 41 percent plan to construct such space next year.

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    Copyright 1996 Conway Data, Inc. All rights reserved

    Legal Notice: Because data comes from many sources, Conway Data
    can assume no responsibility for accuracy or currency.

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