Higher real estate taxes, electricity costs and operating expenses are cited as the three main reasons for the gain. The Studley Effective Rent Index shows that national rents climbed 2.8 percent from 2003 to $42.66 per square foot. However, analysts note that the index remains 17 percent below the record high of $51.18 per square feet reached five years ago.
"What we are seeing is a slow, but steady improvement of rental rates in major commercial business districts across the country," says Mitchell Steir, chairman and CEO of Studley. The firm's report covers rent from Class A properties in such major American markets as Atlanta, New York, San Francisco, and the nation's capital.
The largest year-to-year declines in tenant effective rent were in Philadelphia (down 14.6 percent) and Atlanta (down 5.8 percent).
