Office Rents in 2024: Why Asking Rents Remain High Despite Market Pressure
Overview
A common question among office tenants in 2024 is why asking rents haven’t fallen as sharply as market headlines might suggest. While vacancies are elevated and leasing demand has softened, rent levels across many markets have remained stubbornly high.
FEATURED
Office Rents in 2024: Why Asking Rents Remain High Despite Market Pressure
The explanation lies not in demand, but in capital structures, operating costs, and landlord decision-making. Understanding this disconnect is critical for tenants navigating lease negotiations today.
Why Asking Rents Lag Market Reality
In many cases, office landlords are reluctant—or unable—to lower face rents even when market conditions weaken. Several forces contribute to this dynamic:
Loan covenants tied to minimum rent thresholds
Property valuations dependent on in-place rents
Rising operating expenses and taxes
Lender scrutiny during refinancing
Reducing asking rents can trigger valuation issues that cascade into financing problems, making rent cuts a last resort rather than a first response.
The Difference Between Asking Rent and Effective Rent
While headline rents remain elevated, effective rents tell a different story.
Landlords are increasingly using concessions to bridge the gap, including:
Extended free rent periods
Increased tenant improvement allowances
Flexible lease structures
Shorter lease terms with renewal options
For tenants, this means real occupancy costs may be significantly lower than published rent figures suggest.
Capital Constraints Are Driving Leasing Strategy
Many office owners today are operating under tight capital constraints. With refinancing risk elevated and transaction markets thin, landlords are prioritizing cash flow stability over aggressive repricing.
This environment favors tenants who:
Understand ownership’s financial position
Focus negotiations on total economics, not just rent
Leverage timing and flexibility rather than headline pricing
The most successful deals in 2024 are structured around concessions and terms, not simple rent reductions.
What Office Tenants Should Take Away
Tenants evaluating office space in 2024 should look beyond asking rents and focus on effective cost, flexibility, and risk mitigation.
Key strategies include:
Negotiating concessions early
Stress-testing total occupancy costs
Avoiding decisions based solely on published rent data
In many cases, the best opportunities are found where pricing appears firm on the surface but flexibility exists beneath it.
Written by:
Graham Perry
Senior Director specializing in tenant representation, office leasing strategy, and healthcare real estate transactions.
Featured Stories
Featured Clients
Sign Up for Graham's Monthly Letter
Sign up with your email address to receive news and updates.