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THE GREAT GAP BETWEEN the rents that landlords are asking and those that tenants end up paying is shrinking in office spaces of less than 10,000 square feet, a new study says. Last month, landlords ended up discounting their smaller spaces by an average of 7%--half the average of July, when market activity was at a standstill and owners were begging for tenants, according to Red Real Estate, a boutique brokerage that specializes in smaller deals.
With leasing activity picking up, there is more competition for space, especially in smaller units where demand is traditionally strongest. Companies requiring less than 10,000 feet occupy 33% of all the commercial space in Manhattan, according to Cushman & Wakefield Inc.
Red's co-owner and director of research, Janette Benjamin, cautions that an uptick in activity accounts only partly for the shrinking gap between asking and...