The Signs Keep Pointing To Long-Term Reduction In Office Space Needs

Contrary to reports of corporate executives mandating or begging or offering incentives for employees to return to the office, many will and many won’t. Either way we have far too much office space than is needed, even if more folks come into the office three days a week. As a case in point, last week Dropbox agreed to pay $79 million in lease termination fees to get out of 165,000 square feet of San Francisco Mission Bay office space. Dropbox still has hundreds of thousands of feet of office space in the City so this is just a downsize and one of many examples of corporate office space reductions. Remember, there are a number of silver linings to this grim office space saga. For the most part office tenants are making out like bandits when they negotiate a lease renewal or relocate. Many of my clients have been receiving 9-12 months up-front free rent, as well as discounted contract rent.(that is why you want to hire me jeff.weil@colliers.com).  If you have a company that has longed to own your own office building, in many regions you can now purchase one 75% less than what it would have cost you just 3-4 years ago!  What a bargain, and owner/users may get SBA 20 year fixed-rate financing with just 10% down!  If you already own Class A office buildings and have a lot of cash you can pick up these deep-discounted bargains and cost-average the rest of your portfolio. If you are one of the non-traditional lenders out there charging (and getting) crazy-high interest rates on commercial loans, you are also enjoying the silver lining. Let me know if you have other silver-linings we can share!