In this article, you’ll learn:

• Office landlords prefer tenants from industries like finance, law, tech, and media, valuing their long-term leases and high rent potential.
• Financial service and law firms are favored for their stable cash flows and commitment to lengthy leases.
• How preferred industries influence office market trends, providing landlords with steady income and lower vacancy risks.
• Tips for tenants on using industry leverage to secure better lease terms and enhance office space value.

Ever hear of the expression beggars can’t be choosers? Well, apparently office landlords haven’t.

Despite record low vacancies and record high concession packages to lure in new leases, property owners are still playing favorites when it comes to prospective tenants. While most industries are overwhelmingly leasing less space in a hybrid-friendly work era, there are still certain sectors that are in higher demand among landlords. Why?

Across the board, office landlords have been able to find more stable, long-term income from the following industries:

1. Financial service firms
2. Law firms
3. Consulting firms
4. Tech Companies
5. Media Companies

Judgments are based on the base rent, the net effective rent and the average length of the lease.

Image Source: CoStar

Essentially, landlords feel they can get more out of the lease agreements made with these industries. And when leasing activity has been dismal for most landlords, one great tenant can be an anchor that keeps the ship from going under. Let’s discuss the details. 

Learn how to get the most out of your tenancy in this post-covid, apocalyptic office market. Credit-worthy corporate tenants are in higher demand than ever. You have unprecedented negotiation power to leverage the value of your tenancy. Use it. Download your free copy of Surviving the Office Apocalypse today.

1. Financial Service Firms

Financial services cover a large array of sectors, from banking and finance to insurance and real estate. They lead in attractiveness to landlords now because across the board, they are more willing to pay higher amounts for quality office spaces.

Similarly, they tend to select properties in more desirable, affluent locations, underscoring their ability to set up long-term roots in built-out areas.

Financial service firms also carry a lot of influence over the office market. As a foundational industry, their leasing activity is noted nationwide, and often followed as trends. They largely spearheaded the flight to quality in business-friendly states like Florida.

Over 500 financial services moved to Florida post-Covid including Goldman Sachs, Citadel, Arch Investments, and Blackstone. Other industries followed the money from this migration and the stability promised by latching onto such a solid leg of the economy.

So of course, when office landlords are thinking about what kind of tenant they want, finance will usually come to mind.

2. Law Firms

Interestingly enough, most of the sectors on this list also coincide with the industries that have the most workplace flexibility when it comes to remote or hybrid work.

For example, the legal industry’s embrace of digital tools for documentation, communication, and case management has enabled greater flexibility in where and how legal professionals work. Furthermore, the integration of remote tools like Zoom into the court system has facilitated the transition to virtual proceedings.

Despite this, they have emerged as a top target for struggling landlords…. Why?

Well, other than the fact that much legal activity has returned to an in-person schedule, law firms typically have stable and substantial cash flows due to the nature of their billing practices and client bases, making them reliable tenants. Their ability to pay higher rents and commit to longer leases provides landlords with financial security.

Law firms often require high-quality, prestigious office spaces that enhance their professional image. They are willing to invest in well-located, well-maintained buildings, which helps landlords attract other high-quality tenants.

The legal industry is relatively resilient to economic downturns. While other businesses might struggle during recessions, law firms often remain stable or even thrive, providing landlords with dependable tenants even in challenging economic times.

These factors combined make law firms highly attractive tenants for office landlords, particularly those struggling to fill vacancies or seeking to stabilize their rental income.

3. Consulting Firms

Consulting firms, like law firms, often emerge as prime tenants for struggling office landlords due to several compelling reasons.

Like the other sectors on this list so far, consulting firms generally have stable revenue streams and strong financials, making them reliable tenants. Their creditworthiness reduces the financial risk for landlords.

And like other white-collar businesses, consulting firms require high-quality office spaces to attract and retain top talent, and to present a professional reputation to clients. They are willing to invest in premium office locations and buildings, which helps landlords maintain or enhance the value of their properties.

Consulting firms often seek locations in business hubs or districts that facilitate networking and synergy with other businesses. This can create an ecosystem within an office building, attracting other tenants and fostering a dynamic business environment.

4. Tech Companies

While tech companies appear on this list, it is largely due to the precedent set by leasing activity in prior years.

Widespread downsizing within the tech sector has contributed to a sharp decline in demand for office space.

Now, tech companies are taking on an average of 20% less space than in the past. Compare this to other types of businesses, which have seen only a 6% decline in footprint size since pre-COVID.

The root of this shift is obvious. Technology services are largely the most seamless transitions to at-home or remote work. Because of this, almost 90% of tech workers have been working from home, at least partial time.

While tech is more sensitive to explosive growth on the flipside, it is simultaneously more sensitive to downswings. (Silicon Valley Gold Rush, anyone?)

Note that the average length of the lease term is much shorter in relation to the other industries on this list. This suggests a more cautious approach to expansion that is less stable in the long-term than say a law firm.

Most recently, the tech industry has been rocked by a wave of layoffs. This reflects the delicate push and pull in the tech sector as a recalibration from previous overzealous hiring phases within the industry.

Between 2020 and 2022, the number of tech talent workers in the United States surged by 11.4%, representing an increase of 610,000 workers.

This growth outpaced the nation’s overall employment growth rate during the same period, which stood at 6.3%. Now, continued re-adjusting means a pullback in future tech hiring.

Still, there must be hope among landlords if they are holding out for tech company leases.

This is also because of the promise of rapid evolution and development of technological tools like AI. No sector is perhaps on the cutting edge of revolutionary advancements and make long-term uphauling changes in the way the world operates.

So, of course, there is still a lot of money to be tapped into within the industry. And when the sector finds itself on more of an upswing, leasing activity could even stabilize further.

5. Media Companies

Media firms are often at the forefront of adopting flexible workspaces and innovative office designs. And like a lot of the other sectors on this list, this has translated to a high percentage of hybrid workers. Like finance or programming, the digital nature of media production allows for collaboration and communication to occur seamlessly across distances.

But at the same time, media companies thrive on collaboration and creativity, often requiring open-plan offices, meeting rooms, and production spaces that foster teamwork. So, there is promise for long term leases, even in an era dominated by technological connectivity. And when they do sign leases, they are often willing to invest in industry-specific enhancements.

Often, media companies customize their office spaces to suit their specific needs, such as soundproof rooms, studios, and editing bays.

So, by integrating this information, landlords can market their properties as adaptable to the latest trends in office design, which can appeal to other potential tenants looking for modern, dynamic environments.

Takeaways for Tenants 

No matter what, remember your value as a tenant- especially if your industry is on this list. Landlords are drooling over your application, so use this to your advantage.

You have the power to negotiate favorable lease terms, such as rent discounts, longer durations with renewal options, or allowances for office customization.

And take this further by working with an expert like a True Tenant Rep™. With their expertise, they can demand quality amenities and services that align with your operational needs, from advanced technological infrastructure to flexible workspaces on your behalf.

Further, they’ll help you consider the benefits of prime locations, which can enhance your company’s productivity and brand image. And they know how to emphasize your financial stability and long-term growth prospects in negotiations to secure better lease agreements.

By understanding and leveraging your worth as a prime tenant, you can optimize your office space arrangements and ensure your company thrives in an environment that supports your unique needs and growth potential. But don’t leave it to chance. Learn the steps True Tenant Reps™ would take to safeguard your tenancy in this era of unprecedented tenant-power in Surviving the Office Apocalypse.