Concessions vs asking rents
- In infill industrial markets, asking rents often stay firm while concession packages change actual deal economics. - Brokers are using more than twenty concession types — free rent, TI allowances, office refreshes — to close deals. - Measuring deals by effective rent rather than face rate shows where landlords are truly competing on price and terms (x.com).
Industrial landlords are holding the sticker price steady and cutting side deals instead. In many U.S. warehouse markets, the real discount now shows up in concessions, not the asking rent. (savills.com) Savills said in its Q1 2025 U.S. industrial report that about one-third of markets had asking rents down 5% or more, while rising concessions pushed effective rents lower still. JLL’s 2025 national data put average asking industrial rent at $10.38 per square foot, even as vacancy reached 7.5%. (savills.com) (jll.com) Cushman & Wakefield reported the national industrial vacancy rate eased to 7.0% in Q1 2026 from its late-2025 peak, with 40 million square feet of net absorption in the quarter. Leasing still topped 170 million square feet for a fourth straight quarter, which helps explain why many owners are defending face rates while negotiating extras behind the scenes. (cushmanwakefield.com) Infill industrial means warehouses and small-bay space inside built-up metro areas, close to customers, labor and highways rather than on the suburban edge. The appeal is location, so landlords in those markets often try to protect the quoted rent and compete through lease terms instead. (epa.gov) (commercialrealestate.loans) The key number is effective rent, which converts free months, build-out money and other giveaways into one average rent over the full lease term. CBRE Econometric Advisors said its industrial “taking rent” series was built to capture that spread between asking rents and the rents actually agreed in transactions. (cbre-ea.com) (adventuresincre.com) CBRE said taking rents rose 36% from Q2 2020 to Q1 2024, versus 35% for asking rents, and that 22 of the 74 markets it tracked had taking rents above asking rents as of Q1 2024. That can happen when quoted rents lag market moves, escalations are structured aggressively, or newer deals are getting done in stronger buildings than the listed average. (cbre-ea.com) The concessions themselves are familiar even when the package gets complicated: free rent, reduced starting rent, tenant-improvement allowances, landlord-paid build-outs and refresh work for office areas. LoopNet defines a tenant-improvement allowance as landlord money for build-out, and lease advisers describe free rent and improvement dollars as standard commercial bargaining tools. (loopnet.com) (leasingreality.com) That shift changes how tenants compare deals and how investors read market strength. A flat asking rent can mask a cheaper lease if the owner is paying for months of occupancy, construction work or other up-front costs to get the space filled. (legalclarity.org) (propertese.com) The backdrop is a market that is no longer in the pandemic-era sprint but is still moving a lot of space. JLL counted 533.2 million square feet of leasing activity in 2025, while Cushman said demand in early 2026 stayed concentrated in newer facilities and larger formats. (jll.com) (cushmanwakefield.com) So the headline rent on a warehouse listing now tells only part of the story. In industrial leasing, the sharper measure of competition is the effective rent after every free month, allowance and refresh is counted. (savills.com) (cbre-ea.com)
