Manhattan office tenants find bargains in sublease market
Deep discounts have been offered on shorter term leases
Looking for cheap office space in Manhattan? You may be in luck: Discounts abound in the borough — if you’re willing to sign a short-term sublease.
Take Midtown East: Subleases account for 23 percent of the total office availability in that area, the New York Post reported, and some spaces can be had for more than 50 percent below asking rents.
One lucky tenant is Ronn Torossian’s public relations firm 5W, which has signed on for a 28,336-square-foot sublease at 299 Park Avenue — for which it’s reportedly paying just $25 per square foot, according to the Post.
The sublease rent is a more than 75 percent discount from the area’s asking rents, which can top $110 per square foot, according to the Post. The sublease was offered by MarketAxess Holdings, which moved to 55 Hudson Yards.
But there’s a caveat: 5W’s deal lasts only 18 months, and the typical commercial lease lasts seven to 10 years or longer. The short term may be why the company was able to secure such a deep discount.
Michael Colacino, president of the digital advisory firm SquareFoot, recently told The Real Deal that the shorter the remaining lease term, the deeper the discount when it comes to subleasing.
“Let’s say you had a space that you leased for $50 a foot. Maybe you could get $10 a foot for in the last two years of the lease,” Colacino explained.
But as long as the term fits the tenant’s needs, it can be a good find. [NYP] — Akiko Matsuda