It’s a landlord’s market, so look for fewer concessions and longer lease terms. (No more "Wham! Bam! Thank you, office space!") We sat down with Cresa Dallas managing principal Susan Arledge and her team to find out what else is on the watch list.
Cresa Dallas project management SVP Eric Padilla (left, with site selection and research VP Evan Stair and Susan) tells us some landlords are trying to use the tenant allowances to make upgrades to the buildings. They’re raising the building standards by increasing energy efficiency and adding improved light fixtures while giving less money for tenant improvements. ("Kids, you're finally getting a treehouse... but the money is coming from your allowance.")
Landlords are also pushing for longer-term leases (seven to 10 years). Work letters are getting tougher, as is the red-line process. Plus, construction costs are increasing and there is a labor shortage among subcontractors. (If your kids are planning on sitting on the couch this summer, ask them what they know about installing HVAC.) That means higher prices and longer waiting times for quality contractors, Eric tells us. Everything can be summed up by supply and demand, Evan says. If the occupancy rises, the landlords have more leverage and vice versa.
Evan says there’s more going on outside the buildings, too. Companies are looking at labor supply (and maybe a really cool mullet like laborer Joe Dirt) and cost, but they also gravitate to the red states. Those states (like Texas) tend to be right-to-work states with relaxed regulations and less taxes, he adds, and that means a bigger profit for businesses. The Rowlett native just joined Cresa two weeks ago, and here's a little-known fact: He’s a twin. Eric tells us he plans to ride to the Red River with some friends in the next few weeks on his Harley Streetglide, while Susan is currently at the Masters.
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