In February, Manhattan available sublease space reached 5.2 million square feet, and is up 6.5 percent from last month, the highest monthly change in seven months. Despite reaching the highest level since October 2015—when there was 5.8 million square feet available—it only accounts for 14.3 percent of the available supply.
So, which industries are trying to shed space this year? It is no surprise that the top two industries that have leased space throughout Manhattan for the past six years account for the most sublease space that is on the market. The TAMI (technology, advertising, media and information service) sector represents the most companies with sublease spaces on the market and financial services has the highest percentage of the available sublease supply. There are currently 53 TAMI sector companies with subleases on the market, followed closely by the financial sector with 45. The retail/wholesale sector has the third-most companies as 34 have space on the market, while the professional and legal services sectors round out the top five with 20 and 16 companies, respectively.
From a square footage perspective, financial services accounts for 24.2 percent of the sublease space available, while TAMI represents 21.8 percent. Retail/wholesale remains in the third spot with 16 percent of the available sublease square feet, while legal and professional services trade places and rank fourth and fifth with 7.4 percent and 6.9 percent market shares, respectively.
Midtown has the highest percentage of the available sublease supply, accounting for 63.8 percent of the total market, which is led by 32 financial firms trying to shed 77.1 percent of the available sublease space. Midtown South is led by the retail industry, which has 10 companies trying to shed 41.1 percent of the market’s sublease supply. Downtown available sublease supply is headed up by the financial and insurance industries which combined have 14 companies accounting for 42.1 percent of the availability.
Regardless of which industries are looking to get rid of space, sublease pricing has averaged a 25.6 percent discount to direct asking rents over the past year. This has helped sublease space remain on the market a shorter period of time, averaging eight months compared to direct space which takes an average of 18 months to lease.