According to recent data, business tenant demand is increasing which is prompting office rental rates to increase over 70 percent nationwide. Research also shows that business rentals are up 15.3 percent while the demand for office space continues to increase. Many experts feel that this increase mirrors the growth in the labor markets. According to one economist, “If you look at the last four quarters, tenant growth is nearing 80 msf at an annualized rate, which puts us back in pre-recession territory.”
As a result of this high demand, rental prices are also increasing. According to data, office rental costs increased 2.7 percent compared with last year. This is the strongest quarterly gain since the last peak in 2008. Construction is also expanding, with data showing a 36 percent increase compared to the same quarter in 2014. With the thriving growth in downtown areas in most U.S. cities, rental rates are increasing for high-quality rentals as well as across the board.
Who Has the Strongest Business Rental Market?
Research shows that the markets with the highest demand for business rental space are:
- San Jose
- Los Angeles
- New York
Research also shows that the top cities with the strongest markets for rental growth are:
- San Francisco – 13.8 percent
- Oakland – 8.6 percent
- Orange County, CA – 8.4 percent
- San Mateo County, CA – 8.1 percent
- Nashville – 7.6 percent
- Denver – 7.5 percent
- San Diego – 6.1 percent
- Boston – 5.9 percent
- Charlotte – 5.7 percent
- Houston – 5.7 percent
With So Much Competition, How Can I Ensure I Have the Right Renter?
If you have a business property that you want to rent, now is a great time to do so. The increase in demand for office and business rental properties has led to a rise in rental prices which greatly benefits any property owner and landlord. However, with this high demand will come a large number of potential tenants. To ensure you have the right tenant for your property, run a background check. Tenants can easily lie on an application, including leaving out past rental issues such as eviction. By running a thorough and legal background check through CheckPoint Screening, you can make sure you have all the correct and truthful information you need to make an informed decision about who you want to rent your office space to.