Since the start of the pandemic, 19.3 million square feet of gross sublease space has been put on the Manhattan office market. Sublease space accounts for 26% of all available space as of the beginning of June.
Although sublease space has increased, it is still below the amount that was put on the market during the Great Recession in the late 2000s.
“A flood of sublease space tends to be a drag on the market, causing the availability rate to rise and dragging down pricing, since sublessors often price their space at a discount to landlords’ direct space offerings,” according to CBRE. “For this reason, trends in the sublease market are considered a bellwether for the overall market performance and changes in the momentum of the sublease market are closely monitored.”
CBRE has indicated that the tides are turning in Manhattan as sublease additions slow and workers return to the office.
This year, 2 million square feet of sublease space has been taken off the market, and more than half of that amount happened in April and May as vaccination efforts ramped up.