The surge of Manhattan sublease space appears to be tapering off.
With the city starting to reopen, tenants that put their office space up for sublease are beginning to take that space off the market in significant numbers, according to CBRE. New additions of such space are also beginning to slow.
It all points to signs that the record amount of sublease space — a drag on office rents — is starting to recede.
“There is still a long way to go to absorb the large volume of sublease space currently on the market,” the brokerage wrote in a note. “But with the volume of new additions slowing down, the pace of space withdrawals picking up, and the economy adding back office-using jobs at a steady clip,] there is more cause for optimism that the office market is nearing the beginning of the end of its downturn.”
This year, tenants have withdrawn 2 million square feet of sublease space, with more than half that coming in April and May. Most companies making that move are doing so because they plan to bring workers back to the office.
New additions of sublease space also slowed to 800,000 square feet in May, the smallest figure since availability started shooting up in June of last year.
The Manhattan office market still has a long way to go, though, with sublease space accounting for 26 percent of available square footage at the start of June. If that proves to be the peak, it would be below the market high of 31 percent during the financial crisis of 2008 and 2009.