Advertising, Tech Firms Make Up Bulk Of New NYC Sublease Listings
Technology, advertising, media and information companies are increasingly trying to get rid of their office space in Manhattan as the work-from-home revolution takes hold amid the coronavirus pandemic.
TAMI companies made up almost 45% of the 16.1M SF of available sublease space in Manhattan during Q3, a nearly 13-point increase in the sector’s share of available sublease space since the coronavirus pandemic began, according to a new Savills report. Overall available sublease space, which has grown by 6.6M SF since Q4 2018, is set to continue to climb through the rest of 2020, the report showed.
“We are 100% going to surpass the peak of the financial crisis,” Savills New York and Tri-State Region Research Director Danny Mangru told Bisnow.
The total available space is currently just 200K SF shy of 2009’s peak, Mangru said, and he doesn’t expect the trend to end anytime in the near future.
“There is for sure going to continue to be a slowdown in demand as we cap off 2020,” he said.
Advertising and PR giant Omnicom Group is offering 147K SF for sublease at Hudson Square Properties’ 1 Hudson Square, more than half of its 287K SF office at the building.
Advertising firm R/GA put 113K SF at Brookfield Properties’ 5 Manhattan West on the market, which the company signed a lease for in 2014. Asking rents for the building at that time were between $70 and $80 per SF.
Online real estate database Zillow put two of its offices on the market, totaling over 155K SF: 102,500 SF of its 130K SF at Global Holdings' 1250 Broadway and 53,200 SF at Interbrand’s 130 Fifth Ave.
Coworking giant WeWork offered 156K SF at ABS Partners Real Estate’s 113-133 West 18th St. It inked a 15-year lease for the space in early 2014, and rent is in the $50 per SF range.
The majority of the spaces listed for sublease have two to five years left on their terms, Mangru said. The increase in available sublease space had been on the steady incline since the end of 2018, he said. However, the pandemic has accelerated the upward trend.
Midtown had the most available sublease space in Q3 at 9M SF, Midtown South had 3.6M SF and Downtown had 3.5M SF.
The New York sublease market is in line with a larger trend around the country of technology companies getting rid of office space. The office market has become increasingly uncertain as more companies implement permanent and semipermanent work-from-home policies until a vaccine is released. Most occupancy is below 30% as of September, and office leasing and rents are down from last year.
