TAMI Tenants Boost Office REIT Rents
Heightened interest from TAMI (technology, advertising, media and information) tenants, along with a dwindling supply of new office space, is pushing up REIT office rents. US office vacancy fell from 15.3% to 14.5% at the end of 2014, with large markets like New York and San Francisco boasting a vacancy rate closer to 10%. Trepp REIT Café reports that investors are attracted to office REITs because they're less risky, and yield a comparatively strong return. 2015 saw a return of 3.85%, higher than the FTSE NAREIT All Equity REIT average of 2.06%. These days, TAMI tenants are less interested in traditional spaces and more interested in urban business districts with open, collaborative spaces than offices and cubicles, and fun, creative "green" spaces with access to sunlight. Office owners in larger markets like New York, Boston, Seattle and San Francisco who accommodate this culture shift are the most competitive.