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Analyzing data from lease proposals over the last 90 days, here are some general market statistics on Class A Office space in Metro Atlanta:
- Base Rental Rate – Averaged $22.31, up 1.3% from CBRE’s reported Q1 2013 Class A rental rate of $22.02/rsf. Our sample set included Full Service base rental rates ranging from $16.00 to $32.36/rsf.
- Lease Term – Averaged 72 months; the sample set included lease terms that ranged 36 months to 130 months
- Improvement Allowance – The deals that included an improvement allowance offered an average of $22.84/rsf or $3.44/rsf/year; the sample set included allowances that ranged from $0 to $40.00/rsf.
- Free Rent Periods – Averaged 7.06 months, or 1.18 months/year on an average lease term of 6 years. The sample set included free rent periods that ranged from 0 months to 12 months.
For this edition, we dug a little further into the impact the length of the lease term had on total rent abatement, measured in duration:
Key observations on free rent to lease term indicators:
- 5 year leases – on average, a 60 month term included 4 months of free rent; a factor of 0.8 months free per year
- 7 year leases – on average, an 84 month term included 8 months of free rent; a factor of 1.14 months free per year
- 10 year leases – on average, a 120 month term included 12 months of free rent; a factor of 1.0 months free per year
- Optimize your lease term to maximize free rent – The optimal lease term in order to maximize your free rent to total lease term ratio appears to be 8 years. This lease term averages 9.6 months free, or 1.2 months per year.
Of course, the amount of free rent offered is also highly dependent upon the creditworthiness of the tenant and the amount of improvement allowance or other incentives included in the proposal. But understanding the average deal does allow tenant rep brokers to ability to set appropriate client expectations, as well as negotiate the best deal possible.