Colliers International issued this week its Top Office Metro Snapshot, the firm’s review of the 20 largest office markets in the U.S. The bad news for the federal government is that rents are now rising in all 20 markets, further indication that the window of opportunity to improve rents is closing. That said, the Washington, DC market, in particular, remains soft and GSA is still striking some very good deals.
Yet, the agency’s focus on big headline-grabbing wins has distracted it from harvesting all of the low-hanging fruit that can be yielded simply through firming up soft term, early exercise of renewal options and agreeing to quick succeeding leases at solid discounts. For every one great deal GSA is making, it is missing the opportunity to complete 20 good transactions.
Many lessors are eager to accommodate GSA’s desire to drive down rents, if they can receive extended term. Never have the landlord’s and tenant’s interests been in greater alignment, yet further improvement in the office markets will ultimately drive them apart.