More Tech Firms Putting Up Offices for Sublease in NYC and SF


New York City and San Francisco landlords are dealing with an increase in tech tenant vacancies after the industry buoyed the leasing market during the pandemic.

Office leasing from the tech industry has been on the decline due to layoffs, remote work and a lack of venture capital funding. Total vacancies in Lower Manhattan hit 23.7 percent and Midtown South was at 19.2 percent in the fourth quarter of 2022, according to data from Savills shared exclusively with Commercial Observer.

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For both sections of Manhattan, that constitutes an 11.9 and 10.7 percentage increase in vacancies, respectively, compared to the fourth quarter of 2019, with tech companies being a large contributor. In the same period in 2019, tech leasing made up about 40 percent of new leases in Manhattan, but as of the last quarter amounts to only 5.9 percent, according to Savills.

Savills crunched the tech vacancy data by looking at the amount of space that tech firms are looking to sublet or where they have simply let leases expire, according to Savills’ Marisha Clinton and Devon Munos.

“In terms of what we’re seeing now, renewals are actually outpacing new leases and relocations, and that has to do with discretionary deals that have paused current activities, mostly expiration driven,” Clinton told Commercial Observer. “So in other words, like when we look at the majority of tenants that attempt transactions, a lot of them are not transacting unless they have to due to upcoming lease expirations.”

The city has dealt with a glut of subleases since the pandemic hit. As much as 21.4 million square feet of space was on the subleasing market in the fourth quarter, down only a small amount from a peak of 22 million square feet reached in the first quarter of 2021, according to industry.

The mighty tech industry thrived in 2021 with Amazon adding more than 400,000 employees in 2020, followed by Meta hiring some 13,000 new hires. That has shifted, with Meta laying off 11,000 members of its staff in November 2022. It’s a long fall from when tech was outpacing the finance, insurance and real estate (FIRE) industry as the main driver of Manhattan leasing activity in 2021.

Meta is also spending about $3 billion to reduce its office footprint and has already vacated four buildings across the U.S., while Google parent company Alphabet plans to spend $500 million in the first quarter of 2023 to do the same.

In 2021, firms with footprints in New York City saw an infusion of VC funding totaling about $118 billion, which receded to about $79.4 billion in 2022, a 32.7 percent decrease.

The top tech leasing deal in New York City was Medidata Solutions’ 177,000-square-foot renewal at 350 Hudson Street. Another top deal included Rokt doubling its footprint at 175 Varick Street by 33,860 square feet, bringing its presence to 67,680 square feet.

Rokt was the only firm among the top five deals to both renew and expand, while the other four were simply renewals, according to Savills.

In San Francisco, the supposed capital of the tech industry in the U.S., availability rates were even higher at 32.1 percent, and the biggest leasing deal of the fourth quarter was a renewal amounting to 82,600 square feet for Sigma Computing. The other four of the top five deals in San Francisco were renewals and subleases, the Savills data noted.

Subleasing availability in the West Coast city was 8.2 million square feet in the last quarter. Tech tenants made up about 73 percent of all sublet space in San Francisco in the fourth quarter, according to Munos.

“It will take some time for that to correct itself,” Munos told CO. “Tech for a long time has been the main driver of growth for landlords. So with tech pulling back now, it’s just adding to current market conditions and a weakening [in the market], so that’s going to add to more options for tenants and landlords being more willing to offer very generous concessions and packages in order to attract new tenants and keep tenants.”

Mark Hallum can be reached at