Suburban office space in “freefall”
Got a flier in the mail from Robin Eschliman’s commercial real estate company, and she says suburban office space is “apparently in free fall” in Lincoln.
(I know, that seems to contradict my previous post about one thriving mini-mall, but there it is.) Robin says she tracked 17 sales of commercial office buildings outside of downtown since early 2009 and the highest sale price was $144 per square foot. She says the most stunning sale was for the Perot building near 16th and Old Cheney for about $55 per square foot.
“Not at all what you would expect for relatively newer construction in south Lincoln,” she wrote. “Even more stunning was that the investor had a tenant lined up to move into the space.”
She concludes the average sale price this year has dropped more than 17 percent compared to last year. She said it took awhile for rents to drop — as leases come up for renewal — but now developers are dropping rents.
“Three to five years ago, you would have paid $14 to $16 a foot for base rent,” she says. “Now we are hearing tales of leases being signed for $9.”
She says she’s seeing more people looking to lease retail space inside the city rather than on the outskirts.
O.K., Deena, how about 66% unocccupancy rate for commercial real estate?