Office Leasing by SF: From January to November of 2019, NAI Business Properties assisted in leasing 77,858 SF of office space in Billings consisting of 35 lease transactions. Based on this YTD amount, we expect to see lease 94,000 SF, which is near or just below the annual NAI leasing average since 2012.
The average space size is 2,420 SF with 27 leases being under that average size. The largest lease executed in the Billings market, year to day, is Wipfli’s recent transaction totaling 15,822 SF. The next largest transaction was just under 7,000 SF. 80% of all leases completed were under 3,000 SF. For downtown, 9 of the 35 leases completed were downtown, totaling 39,224 SF. The blended NNN $/SF lease rate for the other downtown leases, excluding Wipfli, was $8/SF.
Landlord Concessions: Rates have remained fairly constant, but concessions continue to be a significant part of each transaction. Regarding concessions, NAI Business Properties has seen an uptick in the total amount of free rent given to tenants, larger improvement packages given to tenants or other landlord provided perks such as free parking.
Absorption vs. Vacancy: 100% of the leasing activity in Billings has been existing companies moving to other facilities, or people moving from home offices. So while absorption is moderately health, vacancy remains unchanged. Billings continues to struggle to bring new office tenants into the market. The disconcerting trends of companies closing in Billings continues to be more prevalent than new firms opening new offices in Billings.