The market for warehouse space remains tight but slack is coming. Citywide vacancy is less than 5% but you can almost feel the air going out of the balloon as oil once again dips into the mid $40’s per barrel. Occupancies are tight but the number of subleases available is on the rise. Deal velocity is slowing and concessions from owners will be on the increase as they realize the number of companies demanding space is shrinking.
Rents city-wide remain at or near record highs but are flattening and there will be downward pressure as institutional owners see vacancy tick-up. Asset valuations (price) remain absurdly high…a function of low interest rates, residual owner perception of value when they could name any price and what rent in comparable buildings will buy.
What does this mean? If you have to renew now not much you can do…if you are looking in late 2015 or early 2016 I suspect things will be different! Rates and prices are going to come down and now the question is how far down will they go….