2023 Q1 Market Update: The Tenant's Advantage
Organizations are still weighing the benefits of hybrid work as they map their return to the office, and many are delaying long-term real estate decisions as much as possible. As we wait to see how the role of the workplace continues to evolve, companies approaching decision points are in relatively good standing in Boston’s downtown market. With sublease availabilities on the rise (again) in an increasingly softening market, occupiers looking to secure new space or renew existing leases are well-positioned to negotiate high-value terms.
A softening market gives occupiers more time to evaluate potential spaces and develop an understanding of their options and leverage points. For occupiers who may be willing to reconfigure or upgrade space, the Class B market is particularly flush with opportunity. So much of the construction pipeline and sublease market has been geared toward Class A users, leaving plenty of strong options among Class B space.
As always during negotiations, it’s important to understand who’s on the other side of the table. In the competition to secure new tenants or renew existing leases, landlords are more and more willing to make concessions, including discounted rents or shorter lease terms. Additionally, with most tenants in the market looking for smaller blocks of space, many landlords have warmed to the idea of reconfiguring their large footprints into smaller space to meet the demand. Knowing the market dynamics at play can offer helpful context during lease negotiations to work toward favorable terms.
Across the Greater Boston market, hybrid work and shrinking footprints are changing the commercial real estate landscape. Market experts are keeping a close eye on the sublease surge and rising interest rates to understand how occupiers can maximize leverage and value in a changing market. Find more data, insights, and predictions for the months ahead in Cresa’s 2023 Q1 Boston CBD Market Update.