Printer Friendly

Studley completes national rent survey.

Studley completes national rent survey

The New York-based national commercial real estate firm of Julien J. Studley, Inc. released the findings of its National Rental Survey, which examines office rentals in major markets across the country. Those cities included in the survey were New York; Boston; Washington, D.C.; Chicago; San Francisco; Atlanta; Philadelphia; downtown Los Angeles; Cleveland; Columbus; Cincinnati; and Houston.

This is the second year that Studley has conducted a survey of this caliber, which, in addition to comparing rentals on the basis of four key components: net rental, operating expenses, taxes and tenant electric, also includes loss factors and the value of concessions for each market. Additionally, for the first time, the Cincinnati office market has been incorporated into this year's survey.

"With the exception of Boston, rentals in all cities surveyed appear optimistic," said Jacque Ducharme, senior vice president and branch manager of Studley's Chicago office. "But, the real story is in the concession packages which have increased dramatically in most cases," added Ducharme, who headed the research effort.

Key Research Findings

Total Rentals: Midtown New York is the most costly office market, with total rentals averaging $47 per square foot for new, Class-A space. Houston, which currently maintains rentals averaging $19 per square foot, is the least expensive office market of the cities surveyed.

Midtown New York also gets top billing for possessing the highest net rental figure ($29 per square foot), while Houston proves the lowest, at $13 per square foot.

The significant gap in total rentals between midtown New York and downtown New York in 1990 ($47 per square foot and $41.50 per square foot respectively), continues to widen this year. While midtown New York has remained at $47 per square foot, downtown New York has seen a decline to $36.50 per square foot.

Boston experienced the most dramatic decrease in its total rental figure, dropping $7.25 from $41 per square foot in 1990 to $34.75 per square foot this year.

Operating Expenses: Operating expenses are highest in San Francisco, at S6.75 per square foot, and lowest in Houston, at $3 per square foot.

Operating expenses also are high in Washington, D.C., at $6.25 per square foot, followed by downtown Los Angeles, at $6.10 per square foot. Midtown New York, downtown New York, Cleveland and Boston all tie for fowth highest, with each possessing an operating expense of $6 per square foot.

Operating expenses, as a percentage of total rent, range from 12.8 percent in midtown New York to 20.8 percent in San Francisco. Last year, while midtown New York was on the low end of the scale at 12.8 percent, Cleveland dominated the higher end, at 20.7 percent.

Taxes: At $10 per square foot, real estate taxes in midtown New York are the highest, representing 21.3 percent of the total rental package.

Other markets which contain high real estate taxes include Chicago ($6.50 per square foot), Washington, D.C. ($6.25 per square foot) and downtown New York ($6 per square foot).

Houston enjoys the lowest real estate taxes, at $1.75 per square foot.

The greatest increase in real estate taxes from 1990 to 1991 occurred in Washington, D.C., which experienced an escalation from $5 to $6.25.

Electricity: Electricity costs range from $1 per square foot in such markets as Boston, Columbus, Cleveland and Cincinnati, to $2 per square foot in midtown New York and downtown New York.

The percentage of total rent allocated to electricity is highest in Houston, at 6.6 percent, and lowest in Boston at 2.9 percent.

Electricity costs remained the same from 1990 to 1991 in all markets.

Concessions: Concessions, which incorporate free rent and the improvement allowance (the dollar amount provided by the landlord toward tenant installations), are most generous in Washington, D.C., at $115 per square foot, and in Chicago, at $114 per square foot. Concessions also are high in midtown New York and downtown Los Angeles, at $90 per square foot.

Concessions fall as low as $17.50 per square foot, as evidenced by the Houston market.

Loss Factor: Loss factors range from 10 percent in Washington, D.C.; Atlanta; downtown Los Angeles; Cleveland; Columbus; and Cincinnati to as high as 25 percent in midtown New York and downtown New York.

Ducharme indicated that the current market affords tenants more leverage than any time in the past decade. However, he cautioned that "while all components of rent are negotiable, both the tenant and landlord have to structure a deal that each side can live with over the long-term."
COPYRIGHT 1991 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Julien J. Studley Inc.
Publication:Real Estate Weekly
Date:Oct 9, 1991
Previous Article:Winthrop launches new strategies.
Next Article:Walter Oertly adds ILGWU.

Related Articles
Studley forms venture with London-based firm.
Scarce space, rising rents continue in NYC.
Financial markets raise concern, but overall activity remains strong.
Studley takes its act on line.
IDRC honors Studley.
Studley: Market is solid.
Julien J. Studley, Inc. (Leases).
CoStar signs agreement with Julien J. Studley. (Technology Update).
Studley report: tenant effective rents declined in 2002.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters