Have Landlords Given Up, Or Is It Just Mine?
Granted, I am not a large tenant in my building. I have about a thousand square feet of office space, but we are doubling the size of the company and I sent a note a number of days ago to my building management asking if I could look at getting perhaps twice as much space.
The building is at least half empty and many of the tenants they do have look to be checking out. So I sortof expected some response, but today I had to follow up to a list of several people at my landlord with an email that said
Uh, hello?
I know I am a small tenant but with a half empty building and COVID uncertainty I sort of expected some sort of positive response
The one thing I have learned is that there are definitely some odd incentives in the real estate world. One that I have found striking is that, at least for my landlord, maintaining growing average rental rates is more important than occupancy or cash flow. In several cases, in a perennially half-empty building, they have let even large tenants walk and leave space open for years rather than give on rates. Is this maybe an agency problem, where the rental staff have different metrics and incentives than the owners? Or maybe it is a function of trying to sell the property, where a new owner who thinks they are good at filling space will care more about average rental rates than occupancy?
