Savills Studley has released its annual Savills Effective Rent Index (SERI), which tracks what tenants are paying for top tier Class A office space (tenant effective rent), and what landlords ultimately walk away with (landlord effective rent) once building expenses and leasing costs are deducted from net rent.
Derived from negotiated office leases, the index ultimately provides critical insight into the health of each market and its movement along the `landlord-tenant favorable’ spectrum.
The regional report explains the effects of construction costs and landlord concessions, employment rates and other important economic factors.
Some Chicago key points, according to the company, include:
- Tenant effective + 12.3% ($31.79), just above 2007 peak of $31.07
- Concessions: as % of rent (30.1%, -0.5 pp from 2013) free 9-12 months, $55-$70/sf
- Landlord confidence mounted as the year progressed due to strong sales and rising occupancy rates.
- Class A leasing volume totaled 3.1 msf during 2014, falling from 3.6 msf in 2013.
- Nevertheless, effective rents in the top tier of Class A properties pushed to their highest levels since 2007.
- 2015 outlook: (10% + growth in effective rent)
