Available Sublease Space Declines
Available sublease space continues to decline and only accounts for 17.5 percent of overall Manhattan available space. At 8.2 million square feet, the available sublease supply has dwindled from 12 months ago when there were more than 10.5 million square feet on the market. This marks the lowest percentage of available space being offered on a sublease basis since the fourth quarter of 2007. However, back then, there was even less available—only 5.7 million square feet. Direct available space was significantly lower back then as well, with only 27 million square feet available compared to 39 million square feet today. One of the main reasons sublease space is down from one year ago is that tenants are still making value-driven real estate decisions. Also, many growing companies are attracted to subleases because of their shorter lease terms and, in some instances, their nearly turnkey move-in condition.
Midtown was the only market of Manhattan’s major three to shrink its available sublease supply over the last 12 months, with just under 3 million fewer square feet available today. Midtown South available sublease space is up 24 percent from a year ago, with 1.7 million square feet available. Downtown Manhattan available sublease supply is also up 6 percent over this same time period, with just under 1.5 million square feet available.
So let’s focus on Midtown. With just over 5 million square feet available, it accounts for 17.8 percent of the available supply. Over the past 12 months, more than 40 subleases greater than 25,000 square feet were signed in Midtown. Most of these subleases were signed in the Avenue of the Americas/Rock Center submarket, with 15 transactions completed there. The sublease activity in this submarket certainly helped its recovery, as the overall availability rate dropped 200 basis points during this time, to 11.6 percent. The next closest submarket is Park Avenue, with seven sublease transactions closed.