The cost of office space and improvements increase
- Rental rates are expected to continue on a gradual incline due to a tightening market and lack of new construction.
- Tenant improvements are worth the expense in order to attract the right employees.
Employment costs outweigh tenant improvement expenses
Tenants desire improvements to their leased space for a variety of reasons: to draw new talent to their business by providing collaborative space and interesting amenities; to create a workspace compatible with the type of business being conducted within the space; and to create a fresh look with updated finishes and higher-quality utilities.
Often, tenant improvements are offered by landlords to incentivize a tenant to choose one space over another; however, due to the lack of available space in Columbia and the rise in construction costs, it is a challenge for landlords to continue to offer tenant improvements in a cost-effective manner. Therefore, tenants who choose to have their space updated may be burdened with rental increases and cost sharing in order to meet improvement requirements. The price of real estate improvements are still far less than wasted employment costs when employers in dated space are unable to attract skilled employees. Therefore, tenants are more apt to pay for improvements that will attract and retain quality employees, rather than not updating their space and spending more in employment costs due to a lack of skilled employee interest.
Construction costs. Tariffs are impacting construction pricing in a dramatic way in Columbia. According to LCK, LLC, “material price increases related to tariffs will fall into three categories: direct increases on imported goods; increases on domestic material due to production overhead; and increases due to uncertainty of the market.
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