Cohen, who owns about 800,000 square feet of office space in Palm Beach County and across the state, often took the drastic step of cutting base rental rates by $10 a square foot just to keep a tenant from moving.
Because of the glut of available space, brokers routinely would counsel clients not to renew their leases because there were so many bargains to be had elsewhere, Cohen said.
But the economic recovery is restoring more balance to the commercial real estate market. Cohen said he still offers free rent and other concessions to tenants, but the deals aren’t nearly as onerous as before.
“The pendulum is moving back to the middle,” Cohen said. “It’s a fair game now.”
Office vacancies remain elevated, but they’re holding steady or declining slightly in Palm Beach and Broward counties.
Palm Beach County’s overall vacancy rate was 20 percent in the second quarter, unchanged from a year ago, according to Cushman & Wakefield. Broward’s vacancy was 16.7 percent, down slightly from a year earlier.
Asking rents in the two counties were in the $27-a-square-foot range, about the same as last year.
While the figures don’t show much improvement in the market, brokers and landlords say the outlook is brightening.
“We’re certainly not at the peak, but I’m pretty positive,” said Andy Petry, a vice president of Liberty Property Trust, which owns 1.4 million square feet of offices from Boca Raton to Miramar. “Instead of downsizing, more tenants are staying in [existing] space, and we’re seeing a decent amount of expansions.”
Progressive Pediatric Therapy moved to bigger digs recently after outgrowing a small office in Boca Raton.
The speech, occupational and physical therapy practice is leasing a 1,400-square-foot office at the MedPlex building in Boca and a 2,200-square-foot office on Okeechobee Boulevard in West Palm Beach. The openings are set for Sept. 1.
“I felt there were some deals out there, but you had to look for them,” owner Aimee Brueck said. “We’ve had referrals from a number of different places, so we felt very comfortable expanding.”
Nearly a dozen upscale office buildings in Broward and Palm Beach counties have hit the market in recent months as owners look to take advantage of a strengthening economy. Presidential Circle in Hollywood and Peninsula Plaza and Peninsula Executive Center in Boca Raton are among the buildings for sale.
Owners believe the assets will fetch more money now before interest rates rise any higher.
South Florida broker Tom Capocefalo, who represents tenants for the Studley real estate firm, said he expects the new building owners to increase rents and reduce concessions.
Large, financially sound companies may still have the leverage to resist post-sale management changes, while entrepreneurs and other small business owners will have a tougher time, Capocefalo said.
“The bigger the tenant, the more of an opportunity they will have,” he said.
Copyright © 2013 the Sun Sentinel (Fort Lauderdale, Fla.), Paul Owers, Sun Sentinel. Distributed by MCT Information Services.
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