Economy Watch: Industrial Tenants Most Satisfied With Their Space
- Feb 24, 2016
Industrial tenants reported the greatest increases in value for amount paid and future space needs this quarter, according to Kingsley Associates’ Q4 2015 Commercial Property Trends, which was released recently. The company surveys office, industrial, retail, and medical office tenants occupying more than 2 billion square feet each year on behalf of its clients.
For the four quarters ending last December, 54.9 percent of industrial tenants indicated that their perceived value for amount paid was “good” or “excellent” regarding their space, up 4.9 percentage points from a year ago. When questioned about future space needs, 27.8 percent of industrial tenants anticipate needing more space, up 6.8 percent over the same period.
Office tenant satisfaction remained steady at 88.7 percent during Q4 2015, but two particular markets enjoyed sharp increases from a year ago. In Chicago, 91.8 percent of tenants reported that their overall satisfaction was “good” or “excellent” with respect to their current office space, an increase of 4.7 percentage points year-over-year. Also, 92.2 percent of Atlanta tenants indicated satisfaction, an increase of 3 percentage points compared with last year.
The sharpest decrease in office tenant satisfaction occurred in San Francisco, where just 84.8 percent of tenants expressed satisfaction with their current space, down 3.5 percentage points from a year ago. The decline, Kingsley posited, is likely due to mushrooming office rents in that market.
Kingsley Associates’ analysis also includes findings about retail and medical office tenants. Perceived value for amount paid decreased 5.6 percentage points among medical office tenants over the last year. Also, when questioned regarding renewal decision factors, 45.4 percent of retail tenants unlikely to renew their leases said that customer traffic was a primary factor, an increase of 15.3 percentage points from a year ago.