Tenants’ preference for high quality or less costly offices — which has been intensified by current conditions — is applying pressure on commodity Class A landlords.
Landlords exposed to commodity assets may need to stretch their underwriting assumptions to capture tenant commitments by offering more compelling lease economics and/or reinvesting in these assets, which are challenging propositions from a lenders’ perspective.
Active tenant requirements focused on these potentially compelling opportunities, especially in a supply-rich market environment, should perform due diligence to ensure their landlords are positioned to remain solvent.
