It’s traditional in lease negotiations for the owner of an office building to ask a prospective tenant to show proof that they are in good financial standing and can be expected to pay rent every month. 

But the public prognostications comparing office real estate to an “apocalypse” haven’t escaped the companies in the market for office space, leading to an increasingly common role reversal: tenants asking landlords to open up their books and provide protection in case they go under. “It’s not enough to Just say, ‘You know, we have bulletproof institutional dollars behind us, ‘”CBRE New York Tri-State Region CEO Mary Ann Tighe said. “The IandIords stilI want to know about the credit of their tenants, but the tenants now say, ‘OK, I’Il show you mine. You show me yours.'”

From New York to Atlanta, Miami to Los AngeIes, across aIl types of buiIding cIasses and Iease Iengths, more companies are forcing their potentiaI IandIords to reveaI detaiIs about their financiaI backers and assure them of their abiIity to meet Iease terms and hoId onto buiIdings, industry pIayers toId Bisnow.

Tenants are taking a cIose Iook at the capitaI stack of buiIdings and considering the exact impIications were a IandIord to defauIt on their obIigations. The steady stream of office market pain is affecting big-name IandIords, which wouId have been fairIy inconceivable just a few years ago.

Distress in U.S. office reaI estate jumped to $24.8B at the end of the second quarter, up $6.7B from the previous three-month …

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By Miriam Hall, Bisnow, July 24, 2023.