Manhattan sublease space at record high after 47% jump

Sublease space in Manhattan’s office market continued to grow in the last quarter of the year, and has now reached the highest level this century, according to a new report from Savills.

Available sublet space in the borough reached 18.6 million square feet at the end of 2020, a 47 percent increase year-over-year. This outpaced the growth in direct available office space, which increased 32.1 percent over the same period. Sublet supply’s share of total available space now stands at 27.2 percent, still short of the 2009 peak of 30.3 percent.

“With many organizations planning to operate remotely until widespread coronavirus vaccination in mid- to late-2021 and many others considering permanent shifts in office utilization, new sublease spaces will continue to become available as tenants look to right-size their office footprints,” Savills’ New York & tri-state region research director Danny Mangru wrote in the report, noting that sublease supply is on track to surpass 20 million square feet by the end of 2021.

Technology, advertising, media, and information (TAMI) tenants accounted for 41.8 percent of newly available sublease space, followed by financial services and insurance at 17.6 percent and retailers and luxury brands at 13.2 percent.

Since the beginning of the pandemic, the four largest blocks of sublease space to hit the market all came in the fourth quarter.

The largest addition came from Tokyo-based public relations and advertising company Dentsu, which is seeking to sublease all of its space at Tishman Speyer’s 341 Ninth Avenue, home to the Morgan General Mail Facility or “Morgan North.” Just a year prior, The Real Deal ranked Dentsu’s 324,00-square-foot lease at the building as the fifth-most valuable to be signed in 2019.

The second largest new addition was at RXR Realty’s 620 Sixth Avenue, where WeWork’s 212,000-square-foot space is now up for grabs. Last July, the co-working company, which is aiming for profitability this year, tapped JLL and CBRE to help it fill millions of square feet in vacant space across the country.

S&P Global is looking to sublease 205,700 square feet at the Retirement System of Alabama’s 55 Water Street in the Financial District. In the previous quarter, EmblemHealth had also put up 163,000 square feet for sublease at the same building. Rounding out the top four, Macy’s put 197,200 square feet of office space on the sublease market at CIM Group’s 1440 Broadway.