Landlords Sweeten Deals

Landlords all over the city are putting large amounts of funding into their properties.

Landlords all over the city are putting large amounts of funding into their properties, converting much of the space into thousands of ready-built offices. Prebuilt space is just another sign that landlords in the city are going out of their way to ensure continued tenant occupancy during a down market. Landlords are offering extra months of free rent, as well as monetary incentives for things like decorators.

In actuality, the vacancy rate has climbed in the second quarter to just over 7 percent. That's up nearly 2 percent from the year before, according to analysts Cushman & Wakefield, Inc. Financial firms are adding more space to an already saturated market, which already has over 20 million square feet vacant. That's up over a third from last year.

Many developers are now offering prospective tenants up to $50 a square foot in incentive pay to allow them to custom-build their own spaces. One landlord has even offered to complete a to-order reconstruction and outfitting at no cost. Offers like that are extremely expensive, when you consider that outfitting a space costs from 65 to 85 dollars per square foot, and for some tenants the number climbs as high as $160 a square foot. Prebuilt office space has its own downsides. Perhaps the biggest downside of pre-outfitting an office space is that, during a low market, the space may sit empty for months before it's occupied.