Office space up for sublease back on the rise

Availability increased to 159M sf in first quarter: CBRE

National /
May.May 09, 2022 12:00 PM
Savills' Jim Wenk (LinkedIn, iStock, Illustration by Kevin Cifuentes for The Real Deal)

Savills’ Jim Wenk (LinkedIn, iStock, Illustration by Kevin Cifuentes for The Real Deal)

The office sublease surge showed signs of abating late last year as companies juggled hybrid work plans and signed for space, but the rise in nationwide availability was back on in the first quarter of 2021.

Sublease available rose 3.6 percent to 159 million square feet across the country, according to CBRE data reported by the Wall Street Journal. The availability is significantly higher than pre-pandemic levels and only 3 million square feet shy of the pandemic high.

In Manhattan, the amount of sublease space available is near record highs. According to Savills, more than 20.2 million square feet were available in the first quarter. That’s down from the 22 million square feet available a year ago, but well above the 13.6 million square feet up for grabs in the first quarter of 2020.

Not every subleasing market is created equally. Along with Manhattan, San Francisco and Washington, D.C. are seeing close to historic highs, while booming Sun Belt cities have lower sublease availability.

The increase in sublease space is likely tied to a widespread increase in more permanent hybrid work scenarios. As a result, companies don’t need as much space as they signed up for prior to the pandemic.

In New York City, a some major names have joined the search for subletters in recent months.

Warner Bros. Discovery is marketing a massive 450,000 square feet for sublease at 30 Hudson Yards, about a third of the company’s footprint at the building. S&P Global is marketing 140,000 square feet occupied by IHS Markit at 5 Manhattan West.

The sublease surge is rankling landlords amid low demand, a changing work environment and rising vacancies.

“There are not enough tenants who will absorb these spaces,” Savills vice chairman Jim Wenk told the publication.

Another crisis is on the horizon for landlords, as JLL data show about 243 million square feet of office leases are set to expire nationally this year.

[WSJ] — Holden Walter-Warner





    Related Articles

    arrow_forward_ios
    Ben Shaoul and 1457 North Main Street (Getty, LoopNet)
    Ben Shaoul plans 376-unit complex near L.A.’s Chinatown
    Ben Shaoul plans 376-unit complex near L.A.’s Chinatown
    CHIP executive director Jay Martin (LinkedIn, iStock / Photo illustration by Priyanka Modi)
    Landlords called it: Vacancy rate jumps, rent-stabilization stays
    Landlords called it: Vacancy rate jumps, rent-stabilization stays
    331 Elmora Avenue and 103 Ryan Street (Kislak Realty)
    Tri-state deal roundup: Multifamily, industrial still hot
    Tri-state deal roundup: Multifamily, industrial still hot
    From left: Vice Media CEO Nancy Dubuc, Rudin’s CEO and co-chairman Bill Rudin, and Dock 72 (Getty Images, S9 Architecture, Rudin Management, iStock)
    Vice scraps move to Rudin’s Dock 72
    Vice scraps move to Rudin’s Dock 72
    From left: Metro Loft Management founder Nathan Berman, Silverstein Properties chairman Larry Silverstein, and 55 Broad Street (Metro Loft, Silverstein Properties, LoopNet)
    Silverstein, Metro Loft pick up Rudin’s 55 Broad Street for $180M
    Silverstein, Metro Loft pick up Rudin’s 55 Broad Street for $180M
    1552-1560 Broadway and Wharton Properties’ Jeff Sutton (Google Maps)
    Investor claims Jeff Sutton cheated him out of millions on Times Square deal
    Investor claims Jeff Sutton cheated him out of millions on Times Square deal
    Burberry's Jonathan Akeroyd with 11 West 42nd Street (Getty, Google Maps, iStock)
    Burberry sews up deal at Tishman Speyer building
    Burberry sews up deal at Tishman Speyer building
    Adam Leitman Bailey, Y. David Scharf, and Miki Naftali with 215 West 84th Street (Adam Leitman Bailey, Morrison Cohen, Getty)
    Naftali lays out project as holdout tenant plays new card
    Naftali lays out project as holdout tenant plays new card
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...